IP Group PLC — Regulatory Filings 2014

Jan 28, 2014

THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser authorised under the Financial Services and Markets Act 2000, as amended ("FSMA") if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

If you sell or have sold or otherwise transferred all of your Existing Shares, you should send this document, together with the accompanying Application Form and Form of Proxy, as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee, except that such documents should not be forwarded or transmitted into the United States, any other Excluded Territory or any other jurisdiction where doing so may constitute a violation of the registration or other local securities laws or regulations. If you have sold or otherwise transferred part of your certificated holding of Existing Shares prior to such date, please consult the stockbroker, bank or other agent through whom the sale or transfer was effected and refer to the instructions regarding split applications set out in the Application Form. If your registered holding of Existing Shares which were sold or transferred were held in uncertificated form and were sold or transferred before 23 January 2014 (the date when the Existing Shares are expected to be marked "ex-entitlement" by the London Stock Exchange), a claim transaction will automatically be generated by CREST which, on settlement, will transfer the appropriate number of Open Offer Entitlements to the purchaser or transferee.

The distribution of this document and the accompanying documents, and/or the transfer of the Open Offer Entitlements through CREST, into jurisdictions other than the United Kingdom may be restricted by law. Therefore, persons into whose possession this document and any accompanying documents come should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, subject to certain exceptions, such documents should not be distributed or forwarded to, or transmitted in or into, the United States or any other Excluded Territory. The attention of Overseas Shareholders and any other person (including, without limitation, stockbrokers, banks and other agents) who has a contractual or other legal obligation to forward this document into a jurisdiction other than the United Kingdom is drawn to paragraph 6 of Appendix 2 of this document.

This document, which comprises: (i) a circular prepared in compliance with Chapter 13 of the Listing Rules; and (ii) a prospectus relating to the Capital Raising Shares and the Consideration Shares prepared in accordance with the Prospectus Rules of the UK Listing Authority under section 73A of FSMA, has been approved by the FCA in accordance with section 87A of FSMA and made available to the public in accordance with Rule 3.2.1 of the Prospectus Rules.

The Company, the Directors and the Proposed Directors whose names appear on page 29 of this document accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Company, the Directors and the Proposed Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect its import.

The New Shares have not been, and will not be, registered under the US Securities Act or qualified for sale under any securities laws of any state or other jurisdiction of the US and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US except pursuant to an applicable exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the US. There will be no public offer in the US. Subject to certain exceptions, this document and the Application Form should not be distributed or forwarded to, or transmitted in or into, the US or any other Excluded Territory.

The Existing Shares are listed on the Official List maintained by the UK Listing Authority and are traded on the London Stock Exchange's main market for listed securities. Application has been made to the UK Listing Authority and to the London Stock Exchange for the Capital Raising Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities respectively. It is expected that Capital Raising Admission will become effective, and that dealings on the London Stock Exchange's main market for listed securities in the Capital Raising Shares will commence, at 8.00 a.m. on 14 February 2014.

Application will be made to the UK Listing Authority and to the London Stock Exchange for the Consideration Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities respectively on or before the Scheme becoming Effective.

IP Group plc

(Incorporated in England and Wales with registered no. 04204490)

Proposed Firm Placing of 30,303,030 Capital Raising Shares and proposed Placing, Open Offer and Offer for Subscription of up to 15,151,826 Capital Raising Shares with the ability to increase the size of the Issue by up to 15,151,204 additional Capital Raising Shares, each at an Issue Price of 165 pence per share

Proposed issue of 38,998,844 Consideration Shares in connection with the proposed acquisition of Fusion IP by means of a scheme of arrangement under Part 26 of the Companies Act

Application for admission of up to 99,604,904 New Shares in IP Group in connection with the Capital Raising and the Acquisition to the Official List and to trading on the London Stock Exchange's main market for listed securities

and

Notice of General Meeting

Sponsor, Broker, Underwriter and Financial Adviser

Numis Securities Limited

Your attention is drawn to the letter from the Chairman of IP Group which is set out in Part I of this document. You should read the whole of this document and any documents incorporated herein by reference. Shareholders, and any other persons considering whether or not to make an application pursuant to the Open Offer or in connection with an investment in the Capital Raising Shares, should review the section of this document entitled "Risk Factors" for a discussion of certain factors that should be considered when deciding on what action to take in relation to the Open Offer and in deciding whether or not to make an application pursuant to the Open Offer or invest in the Capital Raising Shares.

The latest time and date for acceptance and payment in full under the Open Offer is 11.00 a.m. on 11 February 2014. The procedure for acceptance and payment is set out in Appendix 2 of this document and, where relevant, in the Application Form. Qualifying CREST Shareholders should refer to paragraph 4.2 of Appendix 2 of this document. The latest time and date for acceptance and payment in full for the Offer for Subscription Shares under the Offer for Subscription is 11.00 a.m. on 11 February 2014 and the procedures for application any payment are set out in Appendix 4 of this document and, where relevant, in the Subscription Form.

Notice of the General Meeting of the Company, to be held at the offices of the Company at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 12 February 2014, is set out at the end of this document. Shareholders will find enclosed a Form of Proxy for use at the General Meeting. Shareholders are requested to complete and return the Form of Proxy whether or not they intend to be present at the General Meeting. To be valid, Forms of Proxy should be completed and signed in accordance with the instructions printed thereon and returned by post or by hand so as to reach Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and, in any event, not later than 10 a.m. on 10 February 2014. The completion and return of a Form of Proxy will not preclude a Shareholder from attending and voting at the General Meeting.

This document, the Application Form, the Open Offer Entitlements, the Excess CREST Open Offer Entitlements, the Offer for Subscription Entitlements and the Subscription Form do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, New Shares by any person in any jurisdiction in which such an offer or solicitation is unlawful.

Numis, which is authorised and regulated in the UK by the FCA, is acting exclusively for IP Group and no-one else in connection with the Capital Raising or Admission and will not regard any other person (whether or not a recipient of this document) as its client in relation to the Capital Raising and Admission and will not be responsible to anyone other than IP Group for providing the protections afforded to its clients or providing advice in connection with the Capital Raising or Admission or any other matter referred to in this document.

Investors should only rely on the information contained in this document. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representation must not be relied upon as having been authorised by IP Group, the Directors, the Proposed Directors or Numis.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by the FSMA, Numis does not accept any responsibility whatsoever or make any representation or warranty, express or implied, for or in respect of the contents of this document, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Open Offer Entitlements the Excess CREST Open Offer Entitlements, the Offer for Subscription Entitlements or the Capital Raising or Admission and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Numis accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this document or any such statement. Without prejudice to any legal or regulatory obligation on IP Group to publish a supplementary prospectus pursuant to section 87G of the FSMA and paragraph 3.4 of the Prospectus Rules, neither the delivery of this document nor Admission shall under any circumstances create any implication that there has been no change in the business or affairs of the Group taken as a whole since the date of this document or that the information in it is correct as of any time after the date of this document.

The Capital Raising Shares will, on Capital Raising Admission, rank in full for all dividends and other distributions declared, made or paid on the Shares after Admission and otherwise will rank pari passu in all respects with the Existing Shares in issue at the date of this document.

The Consideration Shares will, on Scheme Admission, rank in full for all dividends and after distributions declared, made or paid on the Shares, after Scheme Admission and otherwise will rank pari passu in all respects with the Existing Shares.

Qualifying Non-CREST Shareholders will receive an Application Form. Qualifying CREST Shareholders (who will not receive an Application Form) will receive a credit to their stock accounts in CREST in respect of the Open Offer Entitlements which will be enabled for settlement on 28 January 2014. Applications under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim arising out of a sale or transfer of Existing Shares prior to the date on which the Existing Shares were marked "ex" the entitlement by the London Stock Exchange.

If the Open Offer Entitlements are for any reason not enabled by 3.00 p.m. on 28 January 2014 or such later time and/or date as the Company and Numis may decide, an Application Form will be sent to each Qualifying CREST Shareholder in substitution for the Open Offer Entitlements credited to its stock account in CREST. Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer. The Application Form is personal to Qualifying Shareholders and cannot be transferred, sold or assigned except to satisfy bona fide market claims.

NOTICE TO OVERSEAS SHAREHOLDERS

The New Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act and within the US to persons reasonably believed to be both QIBs and Qualified Purchasers in private placement transactions not subject to the registration requirements of the US Securities Act. Subject to certain exceptions, the New Shares may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US unless in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. For a description of the restrictions on offers, sales and transfers of the New Shares and the distribution of this document please see paragraph 6 of Appendix 2 of this document. By accepting this document, you shall be deemed to have representated that (a) you and any customers you represent are a person that is located outside the US (within the meaning of Regulation S) or (B) you are a QIB and a Qualified Purchaser acquiring the securities referred to in this document for your own account and/or for another QIB and a Qualified Purchaser.

The New Shares, the Application Form, Open Offer Entitlements, Excess CREST Open Offer Entitlements, Offer for Subscription Entitlements and the Subscription Form and this document have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Shares or the accuracy or adequacy of the Application Form, Open Offer Entitlements, Excess CREST Open Offer Entitlements, Offer for Subscription Entitlements and the Subscription Form or this document. Any representation to the contrary is a criminal offence in the US.

Subject to certain exceptions, this document and the Application Form do not constitute an offer of the New Shares to any person with a registered address, or who is resident or located, in the US or any of the other Excluded Territories. The New Shares have not been, and will not be, registered or qualified under the relevant laws of any state, province or territory of the US or any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US or any Excluded Territory except pursuant to an applicable exemption from registration or qualification requirements. Resales of New Shares may only be made (i) outside the US in offshore transactions in reliance on Regulation S or (ii) within the US to investors that are both QIBs and Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer New Shares to investors that do not meet the foregoing requirements. There will be no public offer of the New Shares in the US. The Company is not and does not intend to become an "investment company'' under the US Investment Company Act and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered under the US Investment Company Act, and investors will not be entitled to the benefits of that Act.

All Overseas Shareholders and any other person (including, without limitation, a nominee, custodian or trustee) who has a contractual or other legal obligation to forward this document or any Application Form, if and when received, or other document to a jurisdiction outside the UK, should read paragraph 6 of Appendix 2 of this document.

In addition, until 40 days after the commencement of the Capital Raising, an offer, sale or transfer of the New Shares within the US by a dealer (whether or not participating in the Capital Raising) may violate the registration requirements of the US Securities Act.

Notwithstanding anything to the contrary herein, each prospective investor may disclose to any and all persons, without limitation of any kind, the US federal income tax treatment and tax structure of IP Group and of the transactions contemplated by IP Group. For this purpose, "tax structure" shall mean any fact that may be relevant to understanding the purported or claimed US federal tax treatment of the transaction, provided that none of the following shall for this purpose constitute tax treatment or tax structure information: the name of or other identifying information regarding IP Group, its shareholders or their affiliates; and financial or other information relating to the performance of IP Group or its operations.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE, NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE, CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421 B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION, MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

CONTENTS

Summary		5
Risk Factors		16
	Expected Timetable of Principal Events	27
	Capital Raising Statistics	28
	Directors, Company Secretary, Registered Office and Advisers	29
Important Information		30
Part I	Letter from the Chairman of IP Group	35
Part II	Information on IP Group	56
Part III	Information on Fusion IP	71
Part IV	Operating and Financial Review of IP Group	77
Part V	Historical Financial Information	90
	Part 1 – Historical Financial Information on IP Group	90
	Part 2 – Historical Financial Information on Fusion IP	92
Part VI	Unaudited Pro Forma Statement of Net Assets of the Enlarged Group	121
Part VII	Additional Information	125
Part VIII	Documents Incorporated by Reference	226
Part IX	Definitions and Glossary	229
Part X	Notice of General Meeting	241
Appendix 1	Questions and Answers about the Firm Placing and Placing and Open Offer	244
Appendix 2	Terms and Conditions of the Open Offer	251
Appendix 3	Terms and Conditions of the Firm Placing and the Placing	278
Appendix 4 Terms and Conditions of the Offer for Subscription

SUMMARY

Summaries are made up of disclosure requirements known as 'Elements'. These elements are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of 'not applicable'.

		SECTION A – INTRODUCTIONS AND WARNINGS
A.1	Introduction and	WARNING:
Warnings		THIS SUMMARY SHOULD BE READ AS AN INTRODUCTION TO THE PROSPECTUS;
		ANY DECISION TO INVEST IN THE SECURITIES SHOULD BE BASED ON CONSIDERATION OF THIS DOCUMENT AS A WHOLE BY THE INVESTOR;
		Where a claim relating to the information contained in this document is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating this document before the legal proceedings are initiated; and
		Civil liability attaches only to those persons who have tabled this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus, or it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities.
A.2	Consent for intermediaries	Not applicable, as no consent has been given by the Company or any person responsible for drawing up this document to the use of this document for subsequent resale or final placement of securities by financial intermediaries.

	SECTION B –THE ISSUER
		IP Group plc
B.1	Legal & commercial name	The Company's legal and commercial name is IP Group plc.
B.2	Domicile/Legal form/Legislation/ Country of incorporation	The Company was incorporated with limited liability in England and Wales under the Companies Act 1985 on 4 April 2001 and is domiciled in the United Kingdom. The principal legislation under which the Company operates is the Companies Act and the regulations made thereunder. The Company is subject to the City Code.
		The Group
B.3	The Group's Business	The Group was established to invest in scientific innovation developed in the UK's leading research institutions. The Group's business model is to form, or assist in the formation of, spin-out companies based on that innovation, to take a significant minority equity stake in those spin-out companies and then to grow the value of that equity over time through active participation in the development of such spin-out companies. The Group's strategy has been to build significant minority equity stakes in a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term. An important aspect of the Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long term

		partnerships with a number of leading research universities in the UK. The Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000 and now has exclusive contractual arrangements covering eleven of the UK's leading universities.
		The Company was admitted to AIM in October 2003 and moved to the Official List in June 2006. Subsequent to its admission to AIM, the Group has raised approximately £83 million of net proceeds from equity investors, predominantly to build its portfolio of spin-out companies.
		As at 31 December 2013, the Group had a portfolio of 72 companies in which its combined stake was valued at approximately £286 reference to the values attributed to the Group's investments in such portfolio companies in the unaudited consolidated management accounts of the Group for the year ended 31 December 2013). Up to this date, the Group had invested approximately £122 million in aggregate in its portfolio and had made cash realisations of approximately £42 million. The fair value of the Group's holdings in portfolio companies at, and cash realisations to, 31 December 2013 represents approximately 2.7 times the total cash invested by the Group into its portfolio companies since 2001. Approximately 79 per cent. of the value in the Group's portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. As at 31 December 2013, the aggregate value of the companies in which the Group had an investment exceeded £1.7 billon.		million (calculated by
		The Group's portfolio is diverse with exposure to five main sectors – Energy & Renewables, Medical Equipment & Supplies, Pharma & Biotech, Chemicals & Materials and IT & Communications.
B.4a	Recent trends	The industry in which the Group operates is showing signs of maturing. This is reflected both in the maturing of the Group's portfolio companies and in the increasing recognition, particularly amongst spin-out companies, of the value contributed by companies that specialise in the provision of commercialisation expertise and capital, such as the Group. This in turn has led to an increasing trend amongst companies that are spinning out of universities and other research institutions to work with third party funding specialists, such as the Group.
B.5	Group Structure	The Company is the parent company of the Group and has twenty seven wholly owned, direct or indirect, subsidiaries and a further five subsidiaries in which it holds, directly or indirectly, a majority of the voting interests.
		Major shareholders and other interests
B.6	Notifiable interests/Voting rights	The interests of the Directors and the Proposed Directors, and (so far as is known to the Directors and the Proposed Directors having made appropriate enquiries) of all such persons connected within the meaning of section 252 of the Companies Act with the Directors and the Proposed Directors in the issued share capital of the Company are as follows:
			Number of	Percentage of
		Name		Shares Existing Shares
		Bruce Smith	236,592	0.06
		Alan Aubrey	2,237,089	0.60
		Michael Townend	910,718	0.24
		Gregory Smith Charles Winward	227,685 262,446	0.06 0.07
		David Baynes	None	Nil
		Francis Carpenter	239,151	0.06
		Jonathan Brooks	60,000	0.02
		Mike Humphrey	80,000	0.02
		Douglas Liversidge	None	Nil

		As at 24 January 2014 (being the latest practicable date prior to the publication of this document), the Directors were aware of the following persons who, in addition to the Directors set out above, directly or indirectly, were interested in three per cent. or more of the Company's share capital or voting rights:
		Name					Percentage of Existing Shares
		IAML					29.5
		Lansdowne Partners Limited Baillie Gifford & Co					15.7 12.1
		Sand Aire Limited					8.2
		Oppenheimer Funds, Inc					6.0
		Legal & General Group plc					5.0
		None of the Shareholders has voting rights differing from those of any other Shareholder, nor is the Company directly or indirectly owned or controlled by any person.
		Financial Information on the Company
B.7	Key financial information	The table below sets out the summary financial information of the Group for the three financial years ended 31 December 2012 and the six month periods ended 30 June 2012 and 30 June 2013, which has been extracted without material adjustment from the annual report and accounts of the Company for the financial periods ended 31 December 2012, 31 December 2011 and 31 December 2010 and the interim results of the Company for the six months ended 30 June 2012 and 30 June 2013:
			Unaudited 30 June 2013 £ million	Audited 31 December 2012 £ million	Unaudited 30 June 2012 £ million	Audited 31 December 31 December 2011 £ million	Audited 2010 £ million
		Key consolidated statement of comprehensive income data Portfolio return and revenue Change in fair value of equity and debt instruments	2.2	38.0	32.3	0.9	4.0
		Profit/(loss) on disposal of
		equity investments Change in fair value of limited	(0.1)	11.8	0.1	2.3	0.6
		partnership investments Revenue from services and	0.3	0.4	0.3	0.6	0.2
		other income	1.4	2.3	1.1	2.1	2.2
		Administrative expenses	3.8	52.5	33.8	5.9	7.0
		Research and development
		expenses Share-based payment charge	(0.4) (0.3)	(0.3) (0.8)	(0.2) (0.4)	(0.2) (0.7)	(0.4) (0.3)
		Change in fair value of Oxford Equity Rights asset	(2.5)	(6.0)	(2.5)	(6.0)	–
		Other administrative expenses	(3.0)	(5.6)	(2.6)	(5.1)	(4.7)
			(6.2)	(12.7)	(5.7)	(12.0)	(5.4)
		Operating profit/(loss) Finance income – interest	(2.4)	39.8	28.1	(6.1)	1.6
		receivable	0.4	0.9	0.6	0.6	0.2
		Profit/(loss) before taxation Taxation	(2.0) –	40.7 –	28.7 –	(5.5) –	1.8 –
		Profit/(loss) and total comprehensive income for the period	(2.0)	40.7	28.7	(5.5)	1.8
		Attributable to: Equity holders of the Company	(1.9)	40.7	28.7	(5.5)	1.8
		Non-controlling interest	(0.1) (2.0)	– 40.7	– 28.7	–	–
		Earnings/(loss) per share Basic earnings/(loss) per IP Group Share	(0.51)	11.13	7.84	(1.76)	0.69
		Diluted earnings/(loss) per IP Group Share	(0.51)	10.71	7.64	(1.76)	0.69

			Unaudited	Audited	Unaudited	Audited	Audited
			30 June 2013	31 December 2012	30 June 2012	31 December 31 December 2011	2010
			£ million	£ million	£ million	£ million	£ million
		Key consolidated statement of financial position data
		Investment portfolio	191.9	181.8	171.5	123.8	110.0
		Cash and short-term deposits Total assets	38.1 262.0	47.9 263.5	43.2 251.3	60.5 222.2	21.5 173.8
		Total liabilities	0.4	0.4	0.6	0.6	0.7
		Net assets	261.6	263.1	250.7	221.6	173.1
		The fair value of the Group's portfolio at 31 December 2013 (being the latest
		unaudited figures available prior to the publication of this document) was
		approximately £286 million, compared to approximately £192 million as at
		30 June 2013, a net fair value increase for the six month period of approximately
		£82 million excluding net investments and realisations. Cash, cash equivalents
		and deposits at 31 December 2013 totalled approximately £24 million, compared
		to £38 million as at 30 June 2013.
		Save as set out above, there has been no significant change to the Group's
		financial condition and operating results during or after the period covered by the
		historical key financial information on the Group set out in this Element.
B.8	Pro-forma	The pro forma financial information has been prepared to illustrate the effect on
	information	the consolidated net assets of the Group as if the Acquisition and the Firm Placing
		had taken place on 30 June 2013.
		The unaudited pro forma financial information has been prepared for illustrative
		purposes only and, because of its nature, addresses a hypothetical situation and,
		therefore, does not represent the Group's actual financial position.
					Adjustments
			The Group	Fusion IP			Pro forma net assets
			as at	as at	Acquisition		of the
			30 June 2013 (note 1)	31 July 2013 (note 2)	of Fusion IP (note 3)	Firm Placing (note 4)	Group
			£m	£m	£m	£m	£m
		Assets Non-current assets	222.6	32.5	19.2	–	274.3
		Current assets	–––––––– 39.4	–––––––– 22.2	–––––––– (1.5)	–––––––– 48.6	–––––––– 108.7
		Total assets	–––––––– 262.0	–––––––– 54.7	–––––––– 17.7	–––––––– 48.6	–––––––– 383.0
		Liabilities	––––––––	––––––––	––––––––	––––––––	––––––––
		Non-current liabilities	– ––––––––	(2.4) ––––––––	– ––––––––	– ––––––––	(2.4) ––––––––
		Current liabilities	(0.4) ––––––––	(0.2) ––––––––	– ––––––––	– ––––––––	(0.6) ––––––––
		Total liabilities	(0.4) ––––––––	(2.6) ––––––––	– ––––––––	– ––––––––	(3.0) ––––––––
		Net assets	261.6 ––––––––	52.1 ––––––––	17.7 ––––––––	48.6 ––––––––	380.0 ––––––––
		Notes:
		1. The net assets of the Group at 30 June 2013 have been extracted without material adjustment from the
		unaudited consolidated interim financial statements of the Group for the period ended 30 June 2013 which are
		incorporated by reference in this document.
		Adjustments:
		2. The consolidated net assets of Fusion IP at 31 July 2013 have been extracted without material adjustment from
		the financial information table on Fusion IP, set out in Part V of this document. 3. Further adjustments have been made in respect of the acquisition of Fusion IP, in order to:
		(a)		Eliminate IP Group's investment in Fusion IP as at 30 June 2013 of £12.8 million.
		(b)		Reflect transaction costs directly attributable to the acquisition of Fusion IP, amounting to £1.5 million.
		(c)		Reflect the estimated intangible assets arising on the acquisition of Fusion IP of £32.0 million. For the
				purposes of this pro forma information, no adjustment has been made to the separate assets and liabilities of Fusion IP to reflect their fair value. The difference between the net assets of Fusion IP as stated at their book value at 31 July 2013 of £52.1 million and the estimated consideration of £84.1 million has therefore been presented as a single value in "Intangible assets". The net assets of Fusion IP will be subject to a fair value restatement as at the effective date of the transaction. Actual intangible assets included in the Group's next published financial statements may therefore be materially different from that included in the pro forma statement of net assets.
		4. Adjustments to reflect the net proceeds from the Firm Placing receivable by the Company of £48.6 million (£50.0 million gross proceeds less estimated expenses relating to the Firm Placing of £1.4 million). If the Capital Raising is fully subscribed, the net proceeds receivable by the Company will be £72.9 million (being gross proceeds of £75.0 million less estimated fees relating to the Capital Raising of £2.1 million). If the Board exercises its discretion to increase the size of the Issue by a maximum of one third the net proceeds

		receivable by the Company will be £97.4 million (being gross proceeds of £100.0 million less estimated fees relating to the Capital Raising of £2.6 million).
		5. No account has been taken of the financial performance of the Group since 30 June 2013, the financial performance of Fusion IP since 31 July 2013, nor of any other event save as disclosed above.
B.9	Profit forecast	Not applicable. No profit forecasts or estimates are included within this document.
B.10	Audit report qualifications	Not applicable. None of the Company's annual audit reports on the historical financial information included in this document contain any qualifications by the Company's auditors.
B.11	Working capital insufficiency	Not applicable. The Company is of the opinion that the working capital available to it is sufficient for the present requirements of the Group, that is, for at least twelve months from the date of this document.

	SECTION C – SECURITIES
		The Company's share capital
C.1	Description of Securities	The Company is proposing to issue up to 45,454,856 New Shares pursuant to the Capital Raising. The Directors have the ability to increase the size of the Issue by up to one third should there be sufficient demand.
		The ISIN of the New Shares is GB00B128J450 and the SEDOL of the New Shares is B128J45.
		The ISIN of the Open Offer Entitlement is GB00BJ3VWJ50.
		The ISIN of the Excess CREST Open Offer Entitlement is GB00BJ3VWM89.
		The ISIN for the Offer for Subscription Entitlements is GB00BJ3VWN96.
C.2	Currency of the Issue	The Shares are denominated in Sterling and the Issue Price is payable in Sterling.
C.3	Issued Shares	The Company has 375,258,859 Shares of 2 pence each in issue.
		Rights attaching to the Company's shares
C.4	Rights attaching to securities	The rights attaching to the Shares are uniform in all respects and they form a single class for all purposes. Holders of Shares have one vote on a show of hands and, on a poll vote for every such Share held. Distributions of income or capital are to be distributed amongst the holders of Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them at any time.
C.5	Restrictions on transferability	The Board may decline to register a transfer of any Share which is not fully paid, provided that any such refusal will not prevent dealings in the shares from taking place on an open and proper basis.
		There are no restrictions on the free transferability of the Shares, save that the Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States or under applicable securities laws of Australia, Canada, Japan, New Zealand or the Republic of South Africa and, subject to certain exceptions, the Shares may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within, into or in the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa or any other jurisdiction where such offer or sale would violate the relevant securities laws of such jurisdiction.
		Applications for admission
C.6	Applications for admission	Application has been made to the UK Listing Authority and to the London Stock Exchange for the Capital Raising Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities respectively. It is expected that Capital Raising Admission will become effective, and that dealings on the London Stock Exchange's main market for listed

		securities in the Capital Raising Shares will commence, at 8.00 a.m. on 14 February 2014.
		Application will be made to the UK Listing Authority and to the London Stock Exchange for the Consideration Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities respectively on or before the Scheme becoming Effective.
		Dividend policy
C.7	Dividend policy	The Board's current intention is to retain the Group's earnings in the foreseeable future to finance growth and expansion. It is, however, the Directors' intention to pay dividends when, in the view of the Directors, the Company has sufficient cash for this purpose.

			SECTION D – RISKS
D.1	Key information on the key risks relating to the Company and the Company's business	•	The Group's operations, and the operations of the majority of its portfolio companies, are based in the UK. Accordingly, the performance of the Group is influenced by the general economic climate and trading conditions in the UK. The recent recession in the UK, and subsequent negligible growth, may contribute to a lack of potential co-investors in early stage technology businesses as investors find it increasingly difficult to raise new capital or exit their existing investments in order to realise capital. As a result, the Group's portfolio companies may take longer, or find it difficult, to secure funding to finance their ongoing and future development and the commercialisation of their IP.
		•	The Group is exposed to market risks, principally equity securities price risk, as a result of its equity investments in publicly traded companies, private companies and investments in limited partnerships. The market price of the Group's investments in portfolio companies could be affected by a number of factors including a change in sentiment in the market regarding the portfolio companies, the market's appetite for specific asset classes and the financial or operational performance of the portfolio companies. There may also be a lack of liquidity in investments in the Group's portfolio companies.
		•	The Group's business is dependent upon the continuation of the Partnerships and the other collaborative arrangements which the Group has secured with universities, research intensive institutions and commercial partners pursuant to which it has access to technology and scientific innovation. If any of these arrangements were to be terminated or expire at the end of their term and not be renewed, then the Group would lose any exclusive rights that it has to act as the private sector partner in the commercialisation of IP being generated by such universities or other research intensive institutions.
		•	There are a number of competitors seeking to provide commercialisation services to universities and research intensive institutions in the UK. In addition, certain universities and other institutions may in future become increasingly proactive at seeking to raise private sector funding to support their in-house technology commercialisation activities. Further, other universities, research institutions and companies may create IP that competes, directly or indirectly, with that generated by the Group's portfolio companies.
		•	Investments made by the Group and Fusion IP Group in portfolio companies are generally made at an early stage of development when the portfolio company's technology is materially unproven. Such investments are subject to the following risks typically associated with early stage investments: (a) early stage portfolio companies may not be able to secure subsequent rounds of funding which may restrict their ability to fund ongoing research and the development and commercialisation of their IP; (b) portfolio companies may not be able to source and/or retain appropriately skilled personnel; (c) competing technologies may enter the market which may adversely affect the portfolio companies' ability to commercialise their IP or the portfolio

		companies may not have been able to adequately protect their IP; (d) the portfolio companies may not be able to develop their IP into commercially viable products or technologies or into products or technologies with sufficiently compelling benefits for customers; and (e) there is no certainty that the portfolio companies will generate any, or any significant returns for their shareholders or that the Group will be able to secure a profitable exit in any or all of the portfolio companies.
		• The Group has a portfolio of equity and debt interests in technology based companies and there is a high risk that certain of the Group's current and future investments in portfolio companies may fail, resulting in an impairment on the Group's value and profitability. In addition, failure of companies within the Group's portfolio may make it more difficult for other companies within the Group's portfolio to raise additional capital.
		• The scope of patent protection is dependent upon the relevant invention being kept confidential before the patent application is filed. Where inventions are published by a university or other research intensive institution before a patent has been obtained, this could have a material adverse effect on the business and prospects of the Group. There is no assurance that the portfolio companies will be successful in applying for patent protection for their IP or, if granted, will have sufficient financial resources to enforce its rights against infringing third parties. Alternatively, the Group's portfolio companies may be subject to claims that they are infringing the IP rights of a third party. Making or defending any such claim could result in a portfolio company incurring significant costs and expenses and could materially divert the focus and energies of such company's technical and management personnel. An adverse outcome for a portfolio company in any such claim could lead to such portfolio company having to pay substantial damages (and/or legal costs) and/or being required to cease the manufacture, use or sale of infringing IP and/or to develop or use non-infringing technology.
		• It is the Group's policy generally to maintain a significant minority interest (i.e. an interest of less than 50 per cent.) in its portfolio companies. Where the Group maintains such a minority interest in a portfolio company, it will not typically be able to exercise control over any of the affairs of that company. Further, if a portfolio company raises capital by way of an issue of shares, the Group may face dilution if it does not participate in such financing and/or be required to become subject to provisions which could force the Group to exit from that portfolio company at a time and/or price determined by other investor(s) (for example, by the exercise of drag-along rights). There may also be restrictions on the transfer of shares (e.g. pre emption rights) which mean that the Group will not be able to freely transfer its interest in a portfolio company.
D.3	Key information on the key risks specific to the securities	• The Shares have not been registered in the United States under the US Securities Act or under any other applicable securities laws and are subject to restrictions on transfer contained in such laws. There are additional restrictions on the resale of the Shares by Shareholders who are in the United States and on the resale of the Shares by any Shareholders to any person who is in the United States. These restrictions could make it more difficult to resell the Shares in many instances and this could have an adverse effect on the market value of the Shares.

	SECTION E – THE CAPITAL RAISING
		The Capital Raising
E.1	Net proceeds and expenses	The Company intends to raise gross proceeds of up to approximately £75.0 million through the Capital Raising, assuming the maximum number of Capital Raising Shares are issued pursuant to the Firm Placing, Placing, Open Offer and Offer for Subscription. The Board has the ability to increase the size of the Issue by up to one third, so that gross proceeds would be approximately £100.0 million should there be sufficient demand.

		The total expenses incurred (or to be incurred) by the Company in connection with the Capital Raising are estimated to be £2.1 million and accordingly the maximum net proceeds are expected to be approximately £72.9 million. If the Directors exercise their discretion to increase the size of the Issue by up to one third, the total expenses incurred (or to be incurred) by the Company in connection with the Capital Raising are estimated to be £2.6 million and accordingly the maximum net proceeds are expected to be approximately £97.4 million.
		Reasons for the Capital Raising
E.2a	Reasons for the Offer and Use of Proceeds	The Group has built a platform for the systematic commercialisation of leading technology innovations which, to date, have been primarily sourced from within universities with which the Group has Partnerships.
		The Board believes that there continues to exist a significant opportunity to accelerate the growth of the Group by increasing its overall rate of investment in both its current portfolio and in new early stage opportunities that progress to the post-seed stage, whilst still seeking to preserve the returns that it has historically been able to achieve.
		The Board considers that the Group remains in a highly advantageous position to assess the merits of further investments in its post-seed portfolio companies, given its well-established and in depth understanding of the relevant company in each case.
		The Capital Raising will enable the Group to continue to have flexibility to lead these subsequent investment rounds in both existing and future post-seed companies, decreasing its reliance on external capital and allowing it to maintain significant minority equity stakes with a view to continuing to generate strong equity returns.
		The Group will continue to seek to identity compelling IP based opportunities arising out of its current Partnerships. In addition, the Group may source further opportunities from other research intensive institutions and may explore the possibility of further partnerships or other collaborative arrangements with such institutions.
		The Directors believe that the increased strength of its balance sheet following completion of the Capital Raising will enhance the Group's ability to attract new early stage commercialisation opportunities from, and collaborations with, research intensive institutions and its ability to attract experienced management teams and co-investment partners, as appropriate, into portfolio companies as they develop.
		The Board considers that increasing its capital allocation to biotechnology is attractive at this time. The Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to build innovative therapeutic companies in areas where it can leverage the expertise and assets elsewhere in the Group. The objectives for each such therapeutic company would be to grow it to the stage where it could either be acquired in its entirety by a large pharmaceutical company, with precedent demonstrating that deal values at the early stage are in the region of \$88 million and as high as \$450 million at Phase 2. Alternatively such a company may be grown to the stage where it is mature enough to continue as a standalone entity.
		In line with the ambition of the Board for the Group to operate internationally, IP Group has opened up an office and established a presence along the North East coast corridor of the US. The Board of IP Group believes that this area is a rich source of potentially world-class IP that has not been systematically tapped to date. Furthermore, the Board of IP Group believes that this geographically focussed footprint will enable the Group to establish its brand and build partnerships with key global institutions.
		The Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to build its

		reputation in the US market place, and also to explore accessing additional potentially world-class intellectual property from other research intensive universities in this geographical area.
		Use of proceeds
		The Board currently anticipates that it will utilise (subject, amongst other things, to the individual circumstances of, and rate of realisations obtained from, its portfolio companies) approximately 66 per cent. of the net proceeds of the Capital Raising in continuing to increase investment into the Group's UK IP commercialisation business, approximately 20 per cent. capital towards investment in the development of novel therapeutics and approximately 14 per cent. capital to fund the growth of the Group's developing US business. In addition, it is possible that the Group may use some of the proceeds of the Capital Raising to expand its fund management operations should the opportunity arise and be deemed by the Directors to be in the Group's best interests (although no such opportunity has been identified as at the date of this document).
		The terms of the Firm Placing, the Placing, the Open Offer and Offer for Subscription
E.3	Terms and conditions	Up to 45,454,856 Capital Raising Shares will be issued pursuant to the Firm Placing and the Placing, Open Offer and Offer for Subscription. The Directors have the ability to increase the size of the Issue by up to one third through the issue of up to 15,151,204 additional Capital Raising Shares, such that the gross proceeds would be approximately £100.0 million (approximately £97.4 million net of expenses) should there be sufficient demand. The actual number of Capital Raising Shares to be issued pursuant to the Capital Raising will be notified by the Company via a Regulatory Information Service announcement prior to Capital Raising Admission.
		All the Capital Raising Shares to be issued in connection with the Capital Raising will be issued at the Issue Price of 165 pence per share. The Issue Price represents a discount of 14.9 pence (being approximately 8.3 per cent.) to the closing middle market price (as derived from the Daily Official List) of 179.9 pence per Share on 22 January 2014 (being the last trading day prior to the announcement of the Capital Raising).
		Open Offer Shares will be allocated to Qualifying Shareholders under the Open Offer on a pre-emptive basis.
		The Capital Raising is conditional, inter alia, upon:
		• the passing of the Resolutions at the General Meeting;
		• the Placing Agreement having become unconditional in all respects save for the condition as to Capital Raising Admission and not having been terminated in accordance with its terms prior to Capital Raising Admission; and
		• Capital Raising Admission occurring by no later than 8.00 a.m. on 14 February 2014 (or such later time and date as the Company and Numis may agree, not being later than 8.00 a.m. on 28 February 2014.
		The Firm Placing
		The Firm Placees have conditionally agreed to subscribe for 30,303,030 Capital Raising Shares in aggregate at the Issue Price (representing gross proceeds of approximately £50.0 million). The Firm Placed Shares are not subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer and are not part of the Placing, Open Offer or Offer for Subscription. The Firm Placing is underwritten by Numis.
		Open Offer
		Qualifying Shareholders are being given the opportunity to apply for Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Shares on the Record Date on the basis of 4.0377 Open Offer Shares for every 100 Existing Shares.

		The Open Offer has not been underwritten by Numis, but Numis has, subject to the terms of the Placing Agreement, agreed to use reasonable endeavours to procure placees for Open Offer Shares not taken up in the Open Offer, the Offer for Subscription or the Excess Application Facility. Excess Application Facility Under the Open Offer Qualifying Shareholders who take up all of their Open Offer Entitlements may
		also apply under the Excess Application Facility for additional Capital Raising Shares that they would otherwise not be entitled to. The Excess Application Facility will comprise Open Offer Shares which are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlement and, if the Directors exercise their discretion to increase the size of the Issue, such additional new Shares as they shall allocate to the Excess Application Facility.
		Placing
		To the extent that any Open Offer Shares remain unallocated via the Excess Application Facility and are not subject to the Offer for Subscription they may be allocated to Non-Firm Placees pursuant to the Placing Agreement.
		The Placing may be scaled back in favour of the Offer for Subscription. The Placing is not underwritten.
		Offer for Subscription
		To the extent that any Open Offer Shares remain unallocated via the Excess Application Facility and are not placed under the Placing, they will be made available under the Offer for Subscription. Subscribers may subscribe for Offer for Subscription Shares at the Issue Price. The Offer for Subscription may be scaled back in favour of the Placing. The Offer for Subscription is not underwritten. The Offer for Subscription is only being made in the UK but, subject to applicable law, the Company may allot New Shares on a private placement basis to applicants in other jurisdictions.
		Ability to increase the Capital Raising
		The Directors have the ability to increase the size of the Capital Raising from approximately £75.0 million to up to £100.0 million. The Directors may allocate any Capital Raising Shares relating to such increase to and between the Excess Application Facility, the Placing and/or the Offer for Subscription as they deem fit. Numis has not agreed to underwrite any additional Capital Raising.
		Admission
		It is expected that Capital Raising Admission will become effective and that dealings on the London Stock Exchange in the Capital Raising Shares will commence at 8.00 a.m. on 14 February 2014. No application is currently intended to be made for the Existing Shares or the New Shares to be admitted to listing or dealing on any other exchange.
		Material interests
E.4	Material interests	Not applicable – no interest is material to the Capital Raising.
		Lock-up arrangements
E.5	Lock-up arrangements	The Company is offering the Capital Raising Shares pursuant to the Capital Raising.
		No lock-up arrangements are being entered into in connection with the Capital Raising.
		Interests and dilution
E.6	Interests and dilution	If a Qualifying Shareholder does not take up his Open Offer Entitlements such Qualifying Shareholder's holding will be diluted by up to approximately 10.8 per cent. as a result of the Capital Raising (assuming the gross proceeds of the Capital Raising are approximately £75.0 million and excluding the impact of the Consideration Shares). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlements in full in respect of the Open Offer (and does not receive

		any other Capital Raising Shares pursuant to the Capital Raising) will suffer dilution of approximately 7.2 per cent. to his shareholding in the Company as a result of the Firm Placing.
		If the Directors increase the Capital Raising by one third, the size of the Capital Raising will be approximately £100.0 million and if a Qualifying Shareholder does not take up his Open Offer Entitlements, such Qualifying Shareholder's holding will be diluted by up to approximately 13.9 per cent. as a result of the Capital Raising if subscribed in full (excluding the impact of the Consideration Shares). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlements in full in respect of the Open Offer (but does not receive any other Capital Raising Shares pursuant to the Capital Raising) will suffer dilution of approximately 10.4 per cent. to his shareholding in the Company as a result of the Firm Placing and the issue of the additional 15,151,204 Capital Raising Shares.
E.7	Expenses charged to investor	Not applicable. No expenses will be charged to investors by the Company in connection with the Capital Raising.

RISK FACTORS

An investment in the Company and the New Shares is subject to a number of risks. Accordingly, prior to subscribing for any New Shares, Shareholders and other prospective investors should consider carefully all of the information set out in this document (including the information incorporated by reference) and the risks attaching to an investment in the Company prior to making any investment decision. The following risks are those material risks of which the Directors are aware. Additional risks and uncertainties not presently known to the Directors, or that the Directors currently consider to be immaterial, may also have an adverse effect on the Group and, following the Effective Date, the Enlarged Group.

The business, financial condition in the longer term and/or results of operations of the Group and the Fusion IP Group and, following the Effective Date, the Enlarged Group could be materially and adversely affected by any of the risks described below. In such case, the market price of the Shares and New Shares may decline and Shareholders and other prospective investors may lose all or part of their investment. Shareholders and other prospective investors should consider carefully whether an investment in the Company is suitable for them in the light of the information in this document (including the information incorporated by reference) and the financial reserves available to them.

This section describes the risk factors considered by the Directors and the Proposed Directors to be material in relation to the Group and the Fusion IP Group as discrete groups. These risks will, following the Effective Date, be equally relevant to the Enlarged Group.

RISKS RELATING TO THE IP GROUP AND/OR THE FUSION IP GROUP

General economic climate and trading conditions in the UK

The operations of the Group and the Fusion IP Group, as well as the operations of the majority of their portfolio companies, are currently based primarily in the UK. Consequently, the performance of both the Group and Fusion IP Group are influenced by the general economic climate and trading conditions in the UK. The recent recession in the UK, and subsequent negligible growth, have had (and may continue to have) an adverse effect on trading conditions in the UK and may contribute to a lack of potential co-investors in early stage technology businesses as investors find it increasingly difficult to raise new capital and/or to exit their existing investments in order to realise capital. As a result, the Group and Fusion IP Group portfolio companies may take longer, or find it difficult, to secure funding to finance their ongoing and future development and the commercialisation of their respective IP.

The Group is exposed to market risks, principally equity securities price risk, as a result of its equity investments and investments in limited partnerships. The Group holds investments in a number of quoted companies which are publicly traded on AIM and/or the ISDX Markets and also in private companies whose shares are not traded on a public market. The market price of the Group's investments in portfolio companies could be affected by a number of factors including, but not limited to, a change in sentiment in the market regarding the portfolio companies, the market's appetite for specific asset classes and the financial or operational performance of the portfolio companies. There may also be a lack of liquidity in investments in the Group's portfolio companies.

The Fusion IP Group holds investments in a number of private companies whose shares are not traded on a public market. These portfolio companies could also be affected by a number of factors including, but not limited to, a change in sentiment in the market regarding the portfolio companies, the market's appetite for specific asset classes and the financial or operational performance of the portfolio companies.

Each of these factors could adversely affect the value of the Group's and the Fusion IP Group's portfolio companies and, consequently, the business, financial condition, results of operations and prospects of the Group and the Fusion IP Group.

Loss of key personnel from the Group and the Fusion IP Group

The industry in which the Group and the Fusion IP Group operate is a specialised area and the Group and the Fusion IP Group require highly qualified and experienced employees. Further, given the relatively small size of the Group, its operations are reliant on a small number of key individuals including its Chief Executive Officer, the other Executive Directors, its head of life sciences and head of physical sciences, the Director of IP Exec and the Director of Therapeutics. There is a risk that the Group's and the Fusion IP Group's employees could be approached and solicited by competitors of the Group and the Fusion IP Group or other technology based companies or organisations or could otherwise choose to leave the Group or the Fusion IP Group. The loss of key employees of both the Group and Fusion IP Group could have an adverse effect on the Group's and the Fusion IP Group's business, financial condition, results of operations and/or prospects.

Termination of the Long Term Partnerships, the Other Partnerships and Collaborations and/or the Group's fund management arrangements and the Fusion IP Group's arrangements

The Group's business, results of operations and prospects are partially dependent upon the continuation of the long term Partnerships and the Other Partnerships and Collaborations pursuant to which it has direct or indirect access to technology and scientific innovation. Whilst as at the date of this document the Directors are not aware of any matters that could cause these arrangements to be terminated, if such arrangements were to be terminated (for example, as a result of the Group's failure to perform certain contractual obligations under the relevant contracts) or expire at the end of their term and are not be renewed, then the Group would lose any exclusive rights that it has to act as the private sector partner in the commercialisation of IP being generated by such universities or other research intensive institutions. This could potentially have a material adverse effect on the Group's business, results of operations, performance and prospects. In particular, the following Long Term Partnership of the Group and arrangement relating to the Fusion IP Group are due to expire in the next two years: the Group's University of Oxford chemistry contract (due to expire in November 2015) and the Fusion IP Group's agreement with the University of Sheffield relating to the commercialism of Medical Life Science IP (as defined in paragraph 16.1 of Part VII (Additional Information) of this document)) generated at the university (due to expire in February 2015, although the agreement subsists through to August 2018 in respect of other IP). A summary of the terms of these agreements is set out in paragraphs 15.1 and 16.1 of Part VII (Additional Information) of this document, respectively. If these agreements cannot be extended or renewed, the Group would lose its right to its share of the University of Oxford's founder equity in spin-out companies from the Department of Chemistry and/or the Fusion IP Group would lose its exclusive right to direct that all the university owned Medical Life Sciences IP generated at the University of Sheffield is assigned into a spin-out company in which the Fusion IP Group then acquires an equity interest. Either of the aforementioned could potentially have an adverse effect on the Group's and/or the Fusion IP Group's business as it may result in the Group or the Fusion IP Group (as applicable) not being able to participate in the future potential returns from spin-out companies from either the University of Oxford's Department of Chemistry or the University of Sheffield (in respect of Medical Life Sciences IP only).

In addition, the Group manages third party funds through its venture capital subsidiary, Top Technology Ventures, and these fund management activities provide additional recurring revenue for the Group and, potentially, performance related fees. Whilst as at the date of this document the Directors are not aware of any matters that could cause these arrangements to be terminated, if such arrangements were to be terminated (for example, as a result of the limited partners of the relevant fund exercising any termination rights they may have under the contractual arrangements to which the Group are a party and relating to such fund (such as keyman clauses which are typical to arrangements of this nature) or if the relevant fund comes to the end of its life and is either not extended or succeeded by a follow-on fund), this would lead to a reduction in the Group's recurring revenue. Revenue from fund management activities was approximately £1.4 million in the 12 months ending 31 December 2012. This may therefore adversely affect the business, results of operations, performance and prospects of the Group, primarily as the Group would need to fund its operational expenditure from its cash reserves rather than from this recurring income, such cash reserves which would otherwise be available for investment in the Group's spin-out companies. Further, it would narrow the potential sources of financing available to the Group's portfolio companies within the Group's mandate. For example, IP Venture Fund II is a captive fund which systematically co-invests with the Group in its new spinout companies on the same terms as the Group and in respect of which such investment decisions are made by the Group; if this fund was terminated by its limited partners, this potential source of investment would no longer be available to the Group's spin-out companies and the Group's spin-out companies may be required to seek funds from third party investors which either may not be available or may be available on less favourable terms than the Group and its managed funds were prepared to offer.

Certain of the above arrangements (including some of the Partnerships) contain provisions which entitle the counterparty to terminate such arrangements in the event of a change in control of the Company or other members of the Group. This could make an offer for the Company less attractive to a potential bidder as such bidder would need to secure the consent of each such counterparty to the proposed change of control in order to give it certainty that the counterparties will not exercise their right to terminate their arrangements with the Group in the event that any takeover offer is successful.

Availability of future business opportunities

The Group's ability to expand its business through the entering into of further partnerships and/or other collaborative arrangements with universities, research intensive institutions and other commercial partners will depend on the willingness of organisations of suitable quality to enter into such arrangements on terms acceptable to the Enlarged Group (including, without limitation, as to exclusivity and duration).

Availability to the Group of the substantial shareholdings exemption

The substantial shareholdings exemption regime provides that a gain on a disposal by a company of shares (or an interest in shares or certain assets related to shares) will not be a chargeable gain for corporation tax purposes provided that three conditions are met. Broadly, these conditions are: (i) the "investing company requirement" (i.e. the company or group making the disposal meets certain "trading" conditions); (ii) the "investee company requirement" (i.e. the company whose shares are being disposed of must meet similar "trading" conditions); and (iii) the "investing company" must have held the shares in the "investee company" in such number, and for such time, so as to satisfy the "substantial shareholding requirement".

Shareholders and other prospective investors should note that if, in the future, HM Revenue & Customs determined that, the Group ceased to meet the "investing company requirement" referred to above, then the substantial shareholdings exemption would no longer be available to the Group. This would mean that any gains made by the Group on subsequent disposals of shares (or an interest in shares or certain assets related to shares) in its portfolio companies would not benefit from the relief from corporation tax afforded by the substantial shareholdings exemption and the Group would be liable for corporation tax on any such gains at the then prevailing rate.

In addition, if, in the future, any of the Group's portfolio companies does not meet (or is determined by HM Revenue & Customs not to meet) the "investee company requirement" or the shares held in the portfolio company do not satisfy the "substantial shareholding requirement" at the time that the Group disposes of any shares (or an interest in shares or certain assets related to shares) in such portfolio company, then the substantial shareholdings exemption would not be available to the Group in relation to that disposal and the Group would be liable for corporation tax on any gain on such disposal at the then prevailing rates of corporation tax (currently 21 per cent).

Future revenue from the Group's fund management business

The Group manages third party funds via Top Technology Ventures, its venture capital subsidiary, which specialises in providing equity funding for early stage technology based growth companies. Additional funds broaden the source of financing potentially available to the Group's portfolio companies in circumstances where such investment is aligned with the relevant fund's investment mandate. The Group's fund management activities also leverage the Group's existing competencies to provide additional recurring revenue for the Group and, potentially, performance related fees.

The Enlarged Group's ability to manage funds and to raise further funds in future will depend in part upon the performance of the third party funds that the Group currently manages, future investor appetite for funds investing in early stage companies and the continued authorisations from the Financial Conduct Authority for Top Technology Ventures to manage such funds. If the Group is unable to continue to manage third party funds and/or raise further funds in future, this would lead to a reduction in the Group's recurring revenue.

The Group may face increased competition, including from organisations with access to greater capital than the Group

Other universities, research institutions and companies may create IP that competes, directly or indirectly, with that generated by the Group's portfolio companies.

There are a number of other companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies from universities and research intensive institutions in the UK. These operate a variety of business models and include ANGLE plc, Cambridge Innovation Capital plc, Frontier IP plc, Imperial Innovations Group plc, Imprimatur Capital, Invoke Capital, NetScientific plc, Parkwalk Advisors, Rock Spring Ventures, Spark Ventures, regional development authorities (e.g. Finance Wales, Finance Yorkshire, Scottish Enterprise) the technology transfer offices of certain universities, certain institutional investors and angel investors. In addition, certain universities and other research intensive institutions may in future become increasingly proactive themselves at seeking to raise private sector funding to support their in-house technology commercialisation activities. Furthermore, there are a number of companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies in other jurisdictions in which the Group may operate, including, for example, Allied Minds Inc. in the United States. As a result, the Group may face significant competition (including competition from organisations which have much greater capital resources than the Group). There is no assurance that the Group will in future be able to compete successfully in such a marketplace.

Need for further investment in the Group

The Group will require additional capital in the future for expansion activity, business development and/or further investment in its current portfolio companies, whether from equity realisations from its portfolio companies or new equity or debt sources. If the Group's equity realisations from its portfolio companies are not sufficient and/or if the Group is unable to obtain additional capital on acceptable terms, or at all, it may be forced to curtail or abandon such planned expansion activity, further investment in its portfolio companies and/or business development, which may have a material adverse effect on the business, financial condition or results of operations and prospects of the Group. Further, in the event the Group issues equity to raise such additional capital in the future, such further issue of Shares may be dilutive to Shareholders (see risk factor on page 24 entitled "Further Issuances of Shares may be dilutive to current Shareholders").

Changes in legislation, Government policy and levels of research funding

Changes in legislation (including tax legislation) and Government policy may occur in the UK which may adversely affect the Group, its business and/or the position of the Shareholders and which may reduce the return that Shareholders receive on their investment in the Group.

Specifically, any change to law and/or regulation relating to the funding and resources available to universities and other research intensive institutions could adversely affect the ability of such organisations to carry out research and therefore result in a reduction in the quantity and quality of IP in which the Group may have the opportunity to invest. Any such changes to law and/or regulation may also result in such institutions being unable, or it not being commercially viable for them, to own, develop, exploit and/or protect the IP that they generate.

Furthermore, although the Government announced as part of its comprehensive spending review in October 2010 that Government's investment in science and research will be "ring-fenced" (i.e. that it will not be subject to reductions or cuts), it may decide (or a future Government may decide) to cease or reduce its funding of technology. Such a reduction in funding could also lead to a reduction in the research carried out by universities and other research intensive organisations. In addition, changes to the funding of technology may adversely impact the development activities carried out by portfolio companies by, for example, increasing the costs incurred by a portfolio company in carrying out its business and/or may result in a portfolio company needing to alter the way in which it conducts its business. Any such event may have a material adverse effect on the value of a portfolio company and therefore on the business, financial condition, results of operations and prospects of the Group.

Closure of technology transfer offices and/or spin-out equity management offices at universities and other research intensive institutions

One or more of the universities or other research intensive institutions with which the Group has a Partnership or other collaborative relationship may choose to close its technology transfer office and/or spinout equity management offices (i.e. those parts of the university which are dedicated to identifying research which has potential commercial interest, identifying strategies for how to exploit such research and managing the university or other institution's holdings of spin-out equity).

The technology transfer offices and/or spin-out equity management offices will act as the link between the Group and the universities and other research intensive organisations and, consequently, the closure of such an office would make it more difficult for the Group to identify and source opportunities emanating from that university or other organisation.

The above risk will apply to the Enlarged Group if the Acquisition completes.

RISKS RELATING TO THE GROUP'S PORTFOLIO OF COMPANIES

Investments are generally into companies at an early stage of their development

Investments made by the Group and the Fusion IP Group in portfolio companies are generally made at an early stage of a portfolio company's development when the portfolio company's technology is materially unproven. Such investments are subject to the following risks typically associated with early stage investments:

• (a) early stage portfolio companies may not be able to secure subsequent rounds of funding which may restrict their ability to fund ongoing research and the development and commercialisation of their IP. Any such lack of funding could, in some cases, result in a portfolio company being forced to sell off its assets or in the sale of the portfolio company as a whole;
• (b) portfolio companies may not be able to source and/or retain appropriately skilled personnel. In particular, they may not have the financial resources to compete with the salary and other incentivisation packages offered by their competitors or other technology based companies or organisations;
• (c) competing technologies may enter the market which may adversely affect the portfolio companies' ability to commercialise their IP or the portfolio companies may not have been able to adequately protect their IP (whether due to lack of financial resource or otherwise) or patent applications made by the portfolio companies may not proceed through to grant;
• (d) the technology developed by any portfolio company may fail and/or the portfolio companies may not be able to develop their IP into commercially viable products or technologies or into products which offer sufficiently compelling benefits to customers. The success of portfolio companies may depend upon regulatory approval for certain clinical trials being granted and there is no certainty that such regulatory approval will be forthcoming; and
• (e) there is no certainty that the portfolio companies will generate any, or any significant, returns for their shareholders or that the Group will be able to secure a profitable exit from its investment in any or all of the portfolio companies.

The occurrence of any of these risks or a combination of these risks may adversely affect the development and value of the portfolio companies and, consequently, the business, financial condition, results of operations and prospects of the Group.

Appetite for investment and ability to realise equity shareholdings

Some of the Group's and the Fusion IP Group's portfolio companies may have significant funding requirements in the future. The success of these portfolio companies may be influenced by the market's appetite for investment in early stage companies, which may be insufficient to meet the funding demands of the relevant portfolio companies. As a result, it may take longer than anticipated to develop the business of a portfolio company or it may not be able to develop its business at all.

Consequently, it may take longer for the Group to realise value from its equity investments in portfolio companies which have significant funding requirements and the consideration received by the Group on any sale or other disposal of its investments may include shares and/or deferred cash consideration (the value of which may depend upon the future performance of the relevant portfolio company). Alternatively, the Group may not realise value from such investments at all.

Companies within the Group's portfolio and the Fusion IP Group's portfolio, which may be dominated by one or a limited number of companies, may fail, lose value or fail to generate the anticipated level of returns

There is a high risk that certain of the Group's and the Fusion IP Group's current and future investments in portfolio companies may fail or not succeed as anticipated, resulting in an impairment on the Group's value and profitability. In addition, failure of companies within the Group's portfolio may make it more difficult for other companies within the Group's portfolio to raise additional capital given the impact such failure(s) may have on the reputation and track record of, and therefore investor confidence in, the Group, its management team and/or its portfolio companies.

At any time, a large proportion of the aggregate value of the portfolio companies held by the Group may be accounted for by one, or very few, companies which could exacerbate the impact on the Group if one or more of such companies were to fail. As at 31 December 2013, the Group's portfolio of 72 companies included 44 post-seed businesses. Of these 44 post-seed businesses, the top ten by value represented approximately 79 per cent. of the aggregate value of the Group's portfolio as at 31 December 2013 with the Group's holding in Oxford Nanopore Technologies Limited accounting for approximately 36 per cent. of the aggregate value of the Group's portfolio as at such date.

As equity realisations from the Group's portfolio companies are expected to be achieved through liquidity events, including trade sales and initial public offerings, the total cash received from these sources could vary significantly from year to year.

Protection of IP developed by the Group's portfolio companies

The Group is subject to the normal risks experienced by companies and organisations with investments in portfolio companies operating in technology and IP based industries.

The technology transfer market is based on the principles of identification and protection of IP and its subsequent transfer to commercial partners where appropriate. The scope of patent protection is dependent upon the relevant invention being kept confidential before the patent application is filed. The Group has no contractual right to prevent the universities and other research intensive institutions with which it has collaborative relationships (including those with which it has Partnerships) from publishing their inventions before the point at which the IP is transferred to a spin-out company in which the Group has a direct or indirect equity or debt investment. Where inventions are published before a patent has been obtained, this could have a material adverse effect on the business and prospects of the Group.

There is no assurance that, in the event that the portfolio companies apply for patent or other IP protections, such protections will be granted to the portfolio companies by the relevant regulatory authorities.

Notwithstanding the grant of any such protections, unauthorised third parties may infringe the IP rights of the portfolio companies. It is likely to be difficult for the portfolio companies to police such infringement of their IP rights and, even if they become aware of any such infringement, they may not have the financial resources to enforce their IP rights against such infringing third parties. Alternatively, the Group's portfolio companies may be subject to claims that they are infringing the IP rights of a third party.

Making or defending any such claim could result in a portfolio company incurring significant costs and expenses (including legal and other professional costs) and could materially divert the focus and energies of such company's technical and management personnel. An adverse outcome for a portfolio company in any such claim or subsequent litigation could lead to such portfolio company having to pay substantial damages (and/or legal costs) and/or being required to cease the manufacture, use or sale of infringing IP and/or to develop or use non-infringing technology.

Under English law, IP generated by employees of a company or other organisation in the course of their normal duties is owned by the company or other organisation. However, employee inventors may, in some cases, receive compensation which could be substantial. Should the relevant legislation change so as to allow employees rights to own or exploit IP which they have generated themselves, or to give employees a material share of resulting revenue, the universities and other research intensive institutions with which the Group has Partnerships or other collaborative arrangements may be required to implement such changes and this may have an adverse impact on the value of the IP available for the portfolio companies and, indirectly, the Group.

Furthermore, there is no assurance that other companies and organisations will not independently develop similar or competing technologies which do not infringe the portfolio companies' IP rights, but which adversely affect the commercial viability and/or results of operations of the portfolio companies and therefore, indirectly, the Group.

The Group's influence and control over its portfolio companies may be limited and interests may not align

Whilst the size of the Group's equity investment in each portfolio company will vary between portfolio companies, it will be the Group's policy generally to maintain a significant minority interest (i.e. an interest of less than 50 per cent.), although it may have majority holdings in some companies from time to time.

Where the Group maintains such a minority interest in a portfolio company, it will not typically be able to exercise control over any of the affairs of that company. Further, if a portfolio company raises capital by way of an issue of shares, the Group may face dilution if it does not participate in such financing and/or be required to become subject to provisions which could force the Group to exit from that portfolio company at a time and/or price determined by other investor(s) (for example, by the exercise of drag-along rights). There may also be restrictions on the transfer of shares (e.g. pre-emption rights) which mean that the Group will not be able to freely transfer its interest in a portfolio company. In addition, many portfolio companies will have, or are entitled to put in place, employee share plans which may dilute the Group's interest in a portfolio company.

If the business or other affairs of one or more of the Group's portfolio companies is conducted in a manner that is detrimental to the interests or intentions of the Group, or the Group is forced to exit its investment in a portfolio company, is unable to realise its investment, or suffers a dilution of its interest in a portfolio company, this may have a material adverse effect on the business, financial condition, results of operations or prospects of the Group.

RISKS RELATING TO SHARES AND SHARE ISSUES

The Firm Placees will own a significant percentage of the Group following the Capital Raising, and this concentration of ownership could adversely affect the trading price of the Shares.

Following the Capital Raising, the Firm Placees, will own approximately 74.8 per cent. of the Enlarged Share Capital assuming that the Capital Raising is fully subscribed and 72.2 per cent. of the Group assuming the Capital Raising is fully subscribed and the Scheme becomes Effective. This will reduce to 72.2 per cent. and 69.9 per cent. respectively if the Directors exercise their discretion to increase the issue to £100 million. These Shareholders may be in a position to exert significant influence on the Group. If any of these Shareholders were to act in concert with each other, such Shareholders could have the ability to influence the outcome of matters requiring shareholder approval, including appointments to the Board of the Group and significant corporate transactions, such as an acquisition or other change of control of the Group, and, to a lesser extent, matters requiring the approval of the Board, including the election of Directors, significant corporate transactions and payment of dividends. While the Directors believe that these Shareholders are supportive of the Capital Raising and the Group's strategy, these Shareholders may not remain supportive of the Group generally or any of its specific initiatives. The interests of these Shareholders, moreover, may be different from the interests of the Group or other Shareholders.

Furthermore, this significant concentration of share ownership may adversely affect the market value of the Enlarged Share Capital if investors believe that there are disadvantages in owning shares in the companies with significant shareholder concentration and, also, may reduce the liquidity of the Enlarged Share Capital if these principal Shareholders retain or increase their holdings. Any such decrease in liquidity could have a material adverse effect on the trading price of the Enlarged Share Capital. The concentration of ownership may also deter a third party from making a takeover offer for the Group.

Shareholders will experience dilution in their ownership of IP Group as a result of the Capital Raising and the Acquisition and Shareholders who do not acquire Capital Raising Shares in the Open Offer will experience further dilution in their ownership of IP Group

Qualifying Shareholders who do not participate in the Firm Placing will suffer an immediate dilution in their proportion of ownership and voting interests in the Enlarged Share Capital following the issue of Capital Raising Shares pursuant to the Firm Placing. Qualifying Shareholders who do not take up their Open Offer Entitlements in full pursuant to the Open Offer, will suffer an immediate further dilution in their proportionate ownership and voting interests in the Enlarged Share Capital following the issue of the Capital Raising Shares pursuant to their Placing, Open Offer and Offer for Subscription. In addition Qualifying Shareholders who take up the Open Offer Entitlements may still suffer dilution by reason of the Placing, Open Offer and Offer for Subscription.

If the Directors exercise their discretion to increase the Capital Raising up to £100 million, the dilution will be exacerbated. Shareholders will also be diluted following the issue of Consideration Shares if the Scheme becomes Effective.

The Group's share price may fluctuate significantly in response to a number of factors, some of which may be outside of the Group's control

The market price of the Shares could be subject to significant fluctuations due to a change in sentiment in the market regarding the Shares or in response to a variety of factors including, but not limited to, the financial performance of the Group, speculation about the business of the Group or its portfolio companies in the press, media or the investment community, changes to the Group's revenues or profit estimates, the availability and use of debt finance by the Company, regulatory changes affecting the business of the Group and/or its portfolio companies, the publication of research reports by analysts, the Group's ability or decision to pay dividends in accordance with its dividend policy, current affairs and general market conditions.

General fluctuations in stock markets may have an adverse impact on the market price of the Group's Shares, even though such fluctuations are unrelated to the Group's operating performance or prospects. There are a relatively small number of companies with comparable business models to that of the Group. Accordingly, any event which detrimentally affects the companies in this comparator group may adversely affect the value of the Group and the value of the Shares. Furthermore, the operating results and prospects from time to time of the Group may be below the expectations of market analysts and Shareholders. Any of these events could result in a decline in the market price of the Shares.

Suitability of the Shares as an investment

The Capital Raising Shares may not be a suitable investment for all the recipients of this document. Before making a final decision, Shareholders and other prospective investors are advised to consult an appropriate independent financial adviser authorised under the FSMA if such Shareholder or other prospective investor is resident in the UK or, if not, from another appropriately authorised independent financial adviser who specialises in advising on acquisitions of shares and other securities.

The value of the Shares, and the income received from them, can go down as well as up and Shareholders may receive less than their original investment.

In the event of a winding-up of the Company, the Shares will rank behind any liabilities of the Company and therefore any return for Shareholders will depend on the Company's assets being sufficient to meet the prior entitlements of creditors.

The Board may apply the proceeds of the Capital Raising to uses that the Shareholders may not agree with and may make investments that fail to produce income or capital growth or that lose value

The Board will have considerable discretion in the application of the net proceeds of the Capital Raising and Shareholders must rely on the judgement of the Board regarding the application of such proceeds. The net proceeds may be placed in investments that fail to produce income or capital growth or that lose value which, in any such case, may affect the business, financial condition, results of operations and/or prospects of the Group.

The Company's ability to pay dividends in the future is not certain

The ability of the Company to pay dividends is dependent upon it having sufficient cash resources and, where necessary, sufficient distributable reserves out of which any proposed dividend may be paid, which, in the main, is dependent upon the receipt by it of dividends and other distributions from its subsidiaries and realisations made by the Company on its investments in its portfolio companies. The Company can give no assurance that it will be able to pay a dividend on the Shares in the future (whether in cash or any other form, including Shares) or in respect of the amount of any dividend. The dividend policy of the Company is described in paragraph 25 of Part II of this document.

A disposal of Shares by major Shareholders could adversely affect the market price of the Shares

Sales of a substantial number of Shares in the market after the Capital Raising and pursuant to the Acquisition, whether from Shareholders who acquired Capital Raising Shares in the Firm Placing and Placing and/or Open Offer and/or Offer for Subscription from Shareholders who receive Consideration Shares pursuant to the Acquisition, or from pre-existing Shareholders, or the perception that these sales might occur, could depress the market price of the Shares.

Further issuances of Shares may be dilutive to current Shareholders

Other than the proposed issue of New Shares under the Capital Raising, the Board has no plans to offer Shares within the next twelve months, other than potentially pursuant to the Group's LTIP. However, it is possible that the Company may decide to offer additional Shares in the longer term, either to raise capital or for other purposes. If Shareholders do not take up such an offer of Shares, or are not eligible to participate in such an offering, their proportionate ownership and voting interests in the Company will be reduced and the percentage that their Shares will represent of the total issued share capital of the Company will be reduced accordingly. An additional offering could have a material adverse effect on the market price of Shares as a whole.

Shareholders and other prospective investors outside the UK may not be able to subscribe for or receive Capital Raising Shares pursuant to the Capital Raising

The securities laws of certain jurisdictions may restrict the Company's ability to allow participation by Shareholders and other prospective investors in the Capital Raising. In particular, holders of Capital Raising Shares who are located in the US may not be able to exercise their rights unless an exemption from the registration requirements is available under the US Securities Act. Neither the Capital Raising nor the Acquisition Offer will be registered under the US Securities Act. Securities laws of certain other jurisdictions may restrict IP Group's ability to allow participation by Shareholders or other prospective investors in such jurisdictions in any future issue of shares carried out by the Company. Qualifying Shareholders who have registered addresses outside the UK or who are citizens of, or resident or located in, countries other than the UK (including, without limitation, the US or any of the Excluded Territories) should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities in order to enable them to receive Capital Raising Shares or to take up their entitlements to the Open Offer.

Transfer restrictions for Shareholders in the United States may make it difficult to resell Shares or may have an adverse impact on the market price of the Shares

The Shares have not been and will not be registered in the United States under the US Securities Act or under any other applicable securities laws and are subject to restrictions on transfer contained in such laws. There are additional restrictions on the resale of the Shares by Shareholders who are in the United States and on the resale of the Shares by any Shareholders to any person who is in the United States. These restrictions could make it more difficult to resell the Shares in many instances and this could have an adverse effect on the market value of the Shares. There can be no assurance that Shareholders in the United States will be able to locate acceptable purchasers or obtain the required certifications to effect a sale.

The ability of Overseas Shareholders to bring actions or enforce judgments against the Company or the Directors may be limited

The ability of an Overseas Shareholder to bring an action against the Company may be limited under law. IP Group is a public limited company incorporated in England and Wales. The rights of holders of Shares are governed by the laws of England and by the Articles. These rights differ from the rights of shareholders in typical US corporations and some other non UK corporations. An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors or other executive officers of the Company. All of the Directors and executive officers are residents of the UK. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors and executive officers judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and commercial matters, or any judgments under the securities laws of countries other than the UK, against the Directors or executive officers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on foreign securities laws brought against IP Group or the Directors or the executive officers in a court of competent jurisdiction in England or other countries.

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States. Publicly available information about the issuers of securities listed on the Official List differs from and, in certain respects, is less detailed than the information that is regularly published by or about listed companies in the United States. In addition, regulations governing the main market of the London Stock Exchange may not be as extensive in all respects as those in effect on United States markets.

The Company's financial statements are not prepared in accordance with US GAAP

Financial Statements prepared under IFRS differ from those prepared under US GAAP in a number of respects including, but not limited to, revenue recognition, share option compensation, accounting for business combinations and acquisitions of IP and accounting for capital instruments. Potential investors are advised to consult their own professional advisers as to the significance of these differences. In making an investment decision, investors must rely upon their own examination of IP Group, the terms of the offering and the financial information. Potential investors should consult their own professional advisors for an understanding of the differences between IFRS and US GAAP, and how those differences might affect the financial information herein.

The Company believes that it was a ''passive foreign investment company'' for US federal income tax purposes for 2013 and expects to be a "passive foreign investment company" for the current year, which status may result in adverse tax consequences to US investors.

The Company believes that it was a passive foreign investment company (''PFIC'') for US federal income tax purposes for 2013 and expects to be a PFIC for the current year and may, depending on the circumstances, be classified as a PFIC in future taxable years.

If a US investor does not make a QEF Election or a mark-to-market election in respect of its investment in the Company, such investor will be subject to certain adverse tax rules with respect to any ''excess distribution'' made by the Company (for these purposes, any gain realised by a US investor upon disposition of its investment in the Company will generally be characterised as an ''excess distribution''). The tax payable by a US investor on an excess distribution will be determined by allocating such excess distribution rateably to each day of the US investor's holding period for its shares. The amount of excess distribution allocated to the taxable year of such distribution and any period prior to the first day of the first taxable year in which the Company was a PFIC will be included as ordinary income for the current taxable year. The amount of excess distribution allocated to any other period included in the US investor's holding period cannot be offset by any net operating losses of the investor and will be taxed at the highest marginal rates applicable to ordinary income for each such period and, in addition, an interest charge will be imposed on the amount of tax for each such period. A US investor may be able to mitigate the adverse consequences of the Company's PFIC status described above by making either a QEF Election or a mark-to-market election. See paragraphs 14.2 and 14.3 of Part VII of this document.

ERISA prohibited transaction rules might apply to certain transactions of the Company.

Although the Company expects to qualify as a venture capital operating company ("VCOC") under the U.S. Department of Labor's "plan asset regulations", the Company cannot predict in advance, nor can there be any continuing assurance, that the VCOC exception will apply. If the Company does not qualify as a VCOC (or ceases to qualify as a VCOC), and benefit plan investors (as described in paragraph 14.3 of Part VII of this document) own 25 per cent. or more of any class of equity in the Company, assets of the Company may be deemed to be plan assets, and prohibited transaction rules under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") may restrict certain transactions of the Company. There is no guarantee that an exemption from such prohibited transaction rules will be available.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event	Time/Date
Record Date for entitlement under the Open Offer	5.00 p.m. on 22 January 2014
Announcement of the Capital Raising	23 January 2014
Ex-entitlement date for the Open Offer	23 January 2014
Publication and posting of the Prospectus, Form of Proxy and Application Form	27 January 2014
Open Offer Entitlements credited to stock account of Qualifying CREST Shareholders in CREST	as soon as possible after 8.00 a.m. on 28 January 2014
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST	4.30 p.m. on 5 February 2014
Latest time and date for depositing Open Offer Entitlements into CREST	3.00 p.m. on 6 February 2014
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 7 February 2014
Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via the CREST system	10.00 a.m. on 10 February 2014
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions	11.00 a.m. on 11 February 2014
Latest time and date for receipt of completed Subscription Forms and payment in full under the Offer for Subscription or settlement
of relevant CREST instructions	11.00 a.m. on 11 February 2014
Latest time and date for receipt of Placing commitments	11.00 a.m. on 11 February 2014
General Meeting	10.00 a.m. on 12 February 2014
Expected date of announcement of results of the General Meeting and the Capital Raising through the Regulatory Information Service	12 February 2014
Expected date of Capital Raising Admission and commencement of dealings in Capital Raising Shares	8.00 a.m. on 14 February 2014
Capital Raising Shares in uncertificated form expected to be credited to accounts as soon as practicable in CREST	after 8.00 a.m. on 14 February 2014
Expected date of despatch of definitive share certificates for Capital Raising Shares in certificated form	by 21 February 2014

General notes:

• 1. All references to time in this document are to London time unless otherwise stated.
• 1. The times and dates set out in the expected timetable of principal events above and mentioned throughout this document may be adjusted by IP Group, in which event details of the new times and dates will be notified to a Regulatory Information Service and, where appropriate, Qualifying Shareholders. In particular, in the event that withdrawal rights arise under section 87Q of the FSMA prior to Capital Raising Admission, IP Group and Numis may agree to defer Capital Raising Admission until such time as such withdrawal rights no longer apply.
• 1. Different deadlines and procedures for return of forms may apply in certain cases.
• 1. If you have any queries on the procedure for acceptance and payment, you should refer to the Appendices to this document which answers some of the questions most frequently asked by shareholders about placings and open offers or, alternatively, you should contact the Capita Asset Services on 0871 664 0321 (UK only) or on +44 208 639 3399 (if calling from outside the UK). This Shareholder Helpline is available from 9.00 a.m. until 5.30 p.m. (London time) Monday to Friday. For legal reasons, the Shareholder Helpline will not be able to provide advice on the merits of the Placing and Open Offer or to provide financial, tax or investment advice. Calls from within the UK are charged at 10 pence per minute (including VAT) from a BT landline. Other service providers' costs may vary. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different call charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes.

CAPITAL RAISING STATISTICS

Issue Price per New Share	165 pence
Open Offer Entitlements under the Open Offer	4.0377 Open Offer Shares for every 100 Existing Shares
Number of Shares in issue as at the date of this document	375,258,859
Number of Capital Raising Shares expected to be issued by the Company pursuant to the Firm Placing	30,303,030
Number of Capital Raising Shares expected to be issued by the Company pursuant to the Open Offer¹	15,151,826
Maximum number of Capital Raising Shares that may be issued pursuant to the Capital Raising assuming the Capital Raising is fully subscribed¹	45,454,856
Enlarged Share Capital following completion of the Capital Raising assuming the Capital Raising is fully subscribed¹	420,713,715
Maximum number of Capital Raising Shares as a percentage of the Enlarged Share Capital1	10.8 per cent.
Estimated net proceeds receivable by the Company after deducting the expenses of the Capital Raising1	£72.9 million
Estimated expenses of the Capital Raising1	£2.1 million

ACQUISITION STATISTICS

Number of Consideration Shares to be issued to Independent
Fusion IP Shareholders pursuant to the Scheme	38,998,844
Consideration Shares issued to Independent Fusion IP Shareholders
as a percentage of the Enlarged Share Capital as further enlarged by
the issue of the Consideration Shares	8.5 per cent.1

Note:

¹ Calculated on the basis that the Capital Raising is £75.0 million and the Company does not elect to increase the size of the Capital Raising

DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors:	Dr Bruce Gordon Smith Alan John Aubrey Michael Charles Nettleton Townend Gregory Simon Smith Charles Stephen Winward Mike Humphrey Francis Adam Wakefield Carpenter Jonathan Brooks	(Non-executive Chairman) (Chief Executive Officer) (Chief Investment Officer) (Chief Financial Officer) (Managing Director, Top Technology) (Senior Non-executive Director) (Non-executive Director) (Non-executive Director)
Proposed Directors from the Effective Date:	David Graham Baynes Douglas Brian Liversidge	(Executive Director) (Non-Executive Director)
Company Secretary:	Angela Leach
Registered Office:	24 Cornhill London EC3V 3ND
Sponsor, broker, underwriter and financial adviser:	Numis Securities Limited The London Stock Exchange Building Paternoster Square London EC4M 7LT
Auditors and Reporting Accountant:	BDO LLP Baker Street London W1U 7EU
Legal advisers to the Company:	as to English law Pinsent Masons LLP Crown Place London EC2A 4ES	as to US law Covington & Burling LLP 265 Strand London WC2R 1BH
Legal advisers to the sponsor, broker, underwriter and financial adviser as to English and US law:	Travers Smith LLP 10 Snow Hill London EC1A 2AL
Registrar:	Capita Asset Services The Registry Beckenham Road Beckenham Kent BR3 4TU
Receiving Agent:	Capita Asset Services Corporate Actions The Registry Beckenham Road Beckenham Kent BR3 4TU

IMPORTANT INFORMATION

PRESENTATION OF FINANCIAL INFORMATION

The Company publishes its financial statements in pounds sterling ("£" or "sterling"). The abbreviations "£m" or "£ million" represent millions of pounds sterling and references to "pence" and "p" represent pence in the UK.

The financial information presented in a number of tables in this document has been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded number.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

As required by the Companies Act and Article 4 of the European Union IAS Regulation, the consolidated financial statements of the Company are prepared in accordance with IFRS and IAS issued by the IASB and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB, as adopted by the European Union.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements which may refer to one or more of the following: the Company's or its portfolio companies' financial condition, results of operations, dividends, financing plans, business strategies, budgets, capital and other expenditures, competitive positions, potential growth opportunities, plans and objectives of the Directors and other management and other matters. Statements in this document that are not historical facts are hereby identified as "forward-looking statements". Such forward-looking statements, including, without limitation, those relating to future business prospects, revenue, capital needs, interest costs and income, in each case relating to the Company or its portfolio companies, wherever they occur in this document, are necessarily based on assumptions reflecting the views of IP Group and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Such forward-looking statements should therefore be considered in light of various important factors. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: economic and business cycles, earnings, financial position, returns on capital, anticipated investments and capital expenditure, competition in the Company's or its portfolio companies' principal markets, acquisitions or disposals of interests in portfolio companies and trends in the Company's or its portfolio companies' principal industry sectors.

These forward-looking statements are further qualified by the risk factors disclosed, or incorporated by reference, in this document that could cause actual results to differ materially from those in the forwardlooking statements. For further details, please see the section of this document entitled "Risk Factors".

These forward-looking statements speak only as at the date of this document. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any other law or regulation, IP Group does not have any obligation to update or revise publicly any forward looking statement, whether as a result of new information, further events or otherwise. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any other law or regulation, IP Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this document to reflect any change in IP Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document might not occur. Shareholders and other prospective investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision. Nothing in the preceding paragraphs should be taken as limiting the working capital statement in paragraph 12 of Part VII of this Prospectus.

NOTICE TO US SHAREHOLDERS AND SHAREHOLDERS IN EXCLUDED TERRITORIES

The New Shares have not been and will not be approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Shares or the accuracy or adequacy of this document or the Application Form. There will be no public offer of the New Shares in the US. The Company is not and does not intend to become an "investment company'' under the US Investment Company Act and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered under the US Investment Company Act, and investors will not be entitled to the benefits of that Act. Any representation to the contrary is a criminal offence in the US.

Subject to certain exceptions, this document does not constitute an offer of the New Shares to any person with a registered address, or who is resident or located, in the US or any other Excluded Territory. The New Shares have not been and will not be registered under the relevant laws of any state, province or territory of the US or any other Excluded Territory and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US or any other Excluded Territory except pursuant to an applicable exemption from the registration requirements of such jurisdiction.

Each person to whom the New Shares are distributed, offered or sold outside the US will be deemed by its subscription for, or purchase of, the New Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the New Shares, that:

• (a) it is acquiring the New Shares from the Company or Numis in an "offshore transaction" as defined in Regulation S; and
• (b) the New Shares have not been offered to it by the Company or Numis by means of any "directed selling efforts" as defined in Regulation S.

Each person to whom the New Shares are distributed, offered or sold inside the US will be deemed by its subscription for, or purchase of, the New Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the New Shares, that:

• (a) it is a QIB and Qualified Purchaser acquiring the New Shares for its own account or for the account of a QIB; and
• (b) the New Shares have not been offered to it by the Company or Numis by means of any form of any "general solicitation" or "general advertising" (as such terms are defined in Regulation D).

The New Shares will be "restricted securities" within the meaning of Rule 144(a) (3) under the US Securities Act. Resales of New Shares may only be made (i) outside the US in offshore transactions in reliance on Regulation S or (ii) within the US to investors that are both QIBs and Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer New Shares to investors that do not meet the foregoing requirements.

The ability of an Overseas Shareholder to bring an action against the Company may be limited by law. The Company is a public limited company incorporated in England and Wales. The rights of holders of Shares are governed by English law and by the Articles. These rights differ from the rights of shareholders in typical US corporations and some other non-UK corporations.

NOTICE TO EEA SHAREHOLDERS

In relation to each member state of the EEA which has implemented the Prospectus Directive (each, a "relevant member state") (except for the UK), with effect from and including the date on which the Prospectus Directive was implemented in that relevant member state (the "relevant implementation date"), no New Shares have been offered or will be offered pursuant to the Capital Raising to the public in that relevant member state prior to the publication of a prospectus in relation to the New Shares which has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in the relevant member state, all in accordance with the Prospectus Directive, except that with effect from and including the relevant implementation date, offers of New Shares may be made to the public in that relevant member state at any time:

• (a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
• (b) to any legal entity which has two or more of: (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43 million; and (iii) an annual turnover of more than €50 million, as shown in its last annual or consolidated accounts; or
• (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New Shares shall result in a requirement for the publication by the Company or Numis of a prospectus pursuant to Article 3 of the Prospectus Directive.

The expression an "offer of any New Shares to the public" in relation to any New Shares in any relevant member state means the communication in any form, and by any means, of sufficient information on the terms of the Capital Raising and any New Shares to be offered so as to enable an investor to decide to purchase any New Shares, as the same may be varied in that relevant member state by any measure implementing the Prospectus Directive in that relevant member state, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

In the case of any New Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the New Shares acquired by it in the Capital Raising have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any New Shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the Company or Numis has been obtained to each such proposed offer or resale. Each of the Company and Numis and their respective affiliates, and others, will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

NOTICE TO OVERSEAS SHAREHOLDERS

All Overseas Shareholders and any person (including, without limitation, a nominee, custodian or trustee) who has a contractual or other legal obligation to forward this document or any Application Form, if and when received, or other document to a jurisdiction outside the UK, should read paragraph 6 of Appendix 2 of this document.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and executive officers of the Company. All of the Directors and executive officers are residents of the UK. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors and executive officers judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the UK against the Directors or executive officers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on the foreign securities laws brought against IP Group or the Directors or the executive officers in a court of competent jurisdiction in England or other countries.

NOTICE TO ALL SHAREHOLDERS

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of any information contained in this document for any purpose other than considering an investment in the New Shares is prohibited. By accepting delivery of this document, each offeree of the New Shares agrees to the foregoing.

The distribution of this document and/or the Application Form into jurisdictions other than the UK may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, subject to certain exceptions, such documents should not be distributed or forwarded to, or transmitted in or into, the US or the Excluded Territories or into any other jurisdiction where the extension or availability of the Capital Raising would breach any applicable law. For further information on the manner of distribution of the New Shares, and transfer restrictions to which they are subject, please see paragraph 6 of Appendix 2 of this document.

No action has been taken by the Company or by Numis that would permit an offer of the New Shares, or possession or distribution of this document or any other offering or publicity material, in any jurisdiction where action for that purpose is required other than in the UK.

In connection with the Capital Raising, Numis and any of its affiliates, acting as investors on their own accounts, may take up New Shares and in that capacity may retain, purchase or sell for their own account such New Shares or related investments otherwise than in connection with the Capital Raising. Accordingly, references in this document to New Shares being offered or placed should be read as including any offering or placement of New Shares to Numis or any of its affiliates acting in such capacity. Numis does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by the FSMA, Numis does not accept any responsibility whatsoever or make any representation or warranty, express or implied, for or in respect of the contents of this document, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Open Offer Entitlements, the Placing and/or the Open Offer and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Numis accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this document or any such statement.

The contents of this document should not be construed as legal, business or tax advice. Each prospective investor should consult his, her or its legal adviser, financial adviser or tax adviser for advice. Neither the Company, Numis nor any of their respective directors, employees or representatives is making any representation to any offeree or purchaser or acquirer of the New Shares regarding the legality of an investment in the New Shares by such offeree or purchaser or acquirer under the laws applicable to such offeree or purchaser or acquirer.

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than in considering an investment in the New Shares offered or otherwise made available hereby is prohibited. By accepting delivery of this document, each offeree of the New Shares agrees to the foregoing.

Recipients of this document acknowledge that: (i) they have not relied on Numis or any of its affiliates in connection with any investigation of the accuracy of any information contained in, or incorporated by reference into, this document or their investment decision; and (ii) they have relied only on the information contained in, or incorporated by reference into, this document. In making an investment decision, each prospective investor must rely on its own examination, analysis and enquiry of the Group and the terms of the Placing and Open Offer, including the merits and risks involved.

REFERENCES TO DEFINED TERMS

Capitalised terms have the meanings ascribed to them in Part IX of this document.

GENERAL NOTICE

Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice. This document is for your information only and nothing in this document is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

NO INCORPORATION OF WEBSITE INFORMATION

The contents of the websites of IP Group and its portfolio companies and of Fusion IP and its portfolio companies do not form part of this document.

PART I

LETTER FROM THE CHAIRMAN OF IP GROUP

(incorporated in England and Wales with registered number 04204490)

Registered Office: 24 Cornhill London EC3V 3ND United Kingdom

27 January 2014

Dear Shareholder

Proposed Firm Placing of 30,303,030 Capital Raising Shares and proposed Placing, Open Offer and Offer for Subscription of up to 15,151,826 Capital Raising Shares, with the ability to increase the size of the Issue by up to 15,151,204 additional Capital Raising Shares, each at an Issue Price of 165 pence per share

Proposed issue of 38,998,844 Consideration Shares in connection with the proposed acquisition of Fusion IP by means of a scheme of arrangement under Part 26 of the Companies Act

Application for admission of up to 99,604,904 New Shares in IP Group in connection with the Capital Raising and the Acquisition to the Official List and to trading on the London Stock Exchanges main market for listed securities

and

Notice of General Meeting

1. INTRODUCTION

On 23 January 2014, the Board announced that the Company intends to raise up to approximately £75.0 million (approximately £72.9 million net of all Capital Raising costs and expenses) in a Capital Raising by way of a Firm Placing and a Placing, Open Offer and Offer for Subscription, consisting of the issue of up to 45,454,856 New Shares in aggregate at an issue price of 165 pence per New Share. 30,303,030 New Shares will be issued through the Firm Placing and up to 15,151,826 New Shares will be issued through the Placing, Open Offer and Offer for Subscription. The Board has the ability to increase the size of the Issue by up to one third by the issue of up to a further 15,151,204 Capital Raising Shares should there be sufficient demand. The Firm Placing is fully underwritten by Numis Securities.

The Capital Raising is conditional upon, amongst other things, the passing of the Resolutions by Shareholders at the General Meeting, the Placing Agreement becoming unconditional in all respects and not having been terminated and Capital Raising Admission. Accordingly, Shareholders will be asked to approve the Resolutions at the General Meeting which has been convened for 10.00 a.m. on 12 February 2014 at the Company's offices at 24 Cornhill, London, EC3V 3ND. Details of the Resolutions are set out in paragraph 9 of Part I of this document and the Notice of General Meeting is set out in Part XI of this document.

The purpose of this document is to set out the background to, and reasons for, the Capital Raising, and:

• to explain the Resolutions to be put to Shareholders at the General Meeting; and

• to recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

In addition to the Capital Raising, on 23 January 2014, the Boards of IP Group and Fusion IP announced that they had reached agreement on the terms of a recommended offer for Fusion IP by IP Group, which is to be implemented by way of a scheme of arrangement by Fusion IP under Part 26 of the Companies Act and pursuant to which IP Group will acquire the entire issued and to be issued ordinary share capital of Fusion IP to the extent not already owned by IP Group (the "Acquisition"). Further details on the Acquisition, including the background to and reasons for it, are set out in paragraph 8 of this letter.

It is the Board's opinion that the Capital Raising will strengthen the financial position of the Group and enable it to deploy more capital into new and existing commercialisation opportunities, both in the UK and internationally, and to take advantage of opportunities to broaden its access to potentially world class IP. The Board therefore considers the Capital Raising to be in the best interests of IP Group and IP Group Shareholders as a whole and unanimously recommends that IP Group Shareholders vote in favour of the Resolutions.

2. INFORMATION ON IP GROUP

IP Group was established in 2000 to commercialise scientific innovation developed in the UK's leading research institutions. IP Group's business model is to form, or assist in the formation of, spin-out companies based on that innovation, to take a significant minority equity stake in those spin-out companies and then to grow the value of that equity over time through taking an active role in the development of these spin-out companies. IP Group's strategy has been to build significant minority equity stakes across a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term.

2.1 Partnerships and other collaborative arrangements with UK universities and research intensive institutions

An important aspect of IP Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long-term partnerships with a number of leading research universities in the UK. IP Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000 and now has direct contractual arrangements covering eleven of the UK's leading universities including, most recently, its entry into of an IP commercialisation agreement with the University of Manchester in February 2013.

In the last quarter of 2009, IP Group acquired a strategic stake in Fusion IP and entered into a co-investment agreement with Fusion IP relating to spin-out companies originating from Fusion IP's university partners, giving IP Group partial access to the scientific innovation from these leading research universities. In addition, in January 2011, IP Group also broadened its relationship with the University of Oxford by acquiring a stake in, and forming a commercialisation alliance with, Technikos, a venture capital fund specialising in early-stage medical technology with a long-term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering.

More recently, IP Group completed a £5.0 million strategic investment in Cambridge Innovation Capital plc in October 2013. Cambridge Innovation Capital has raised £50.0 million to support the growth of innovative businesses located in the "Cambridge Cluster" and will be supported by the University of Cambridge's commercialisation office, Cambridge Enterprise. IP Group and Cambridge Innovation Capital have also entered into a memorandum of understanding to share information on investment and co-investment opportunities in the Cambridge Cluster and, where practicable, alongside other co-investors, to provide each other with access to such co-investment opportunities.

IP Group also has informal arrangements with other universities in the UK and it leverages the capabilities of its in-house sourcing team to identify and pursue compelling standalone opportunities arising from such universities.

The most recent Research Assessments Exercise (the "RAE"), undertaken in 2008, analysed the quality of the research carried out in UK research institutions. The RAE ranked the top 25 universities in the UK by reference to the number of Category A researchers at such universities (broadly defined as someone who devotes the majority of his or her time to research) and measured the overall quality of the research emanating from each of these institutions. IP Group currently has access, either through a direct contractual relationship or otherwise through its relationships with and stakes in both Fusion IP and Technikos, to 12 of these top 25 research institutions. The Directors believe that no other organisation seeking to provide commercialisation services to UK research institutions has as broad a range of access to high quality research in the UK.

2.2 IP commercialisation agreements with US universities

In December 2013, IP Group announced that it had expanded its access to intellectual property beyond the UK to the East Coast of the United States by its entry into of IP commercialisation agreements with each of the following:

• Columbia Technology Ventures, the technology transfer office of Columbia University; and
• The University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme ("UPstart").

Each agreement has an initial pilot phase of eighteen months and focuses on early stage, proof of principle opportunities based on intellectual property developed at Columbia University and the University of Pennsylvania. It is intended that a proportion of the proceeds of the Capital Raising will be applied towards commercialisation opportunities arising under these agreements, together with any additional collaborations in the US which the Enlarged Group may seek to conclude following the date of this document. Further details on each of the university counterparties to these agreements and the agreements themselves are set out in paragraphs 15.17 and 15.18 of Part VII of this document.

2.3 IP Group's portfolio

IP Group was quoted on AIM in October 2003 and moved to the Official List in June 2006. Subsequent to its admission to AIM, IP Group has raised approximately £83 million of net proceeds from equity investors, predominantly to build its portfolio of spin-out companies.

IP Group works with its university partners and other collaborators to identify promising research and to create and build businesses around this research. IP Group's extensive expertise in systematically identifying and commercialising intellectual property, combined with its inside knowledge of both industry and finance, has enabled the Group to create a strong and diverse portfolio with exposure to five main sectors – Energy & Renewables, Medical Equipment & Supplies, Pharma & Biotech, Chemicals & Materials and IT & Communications.

As at 31 December 2013, IP Group had a portfolio of 72 companies in which its combined stake was valued at approximately £286 million1. Up to this date, IP Group had invested approximately £122 million in aggregate in its portfolio and had made cash realisations of approximately £42 million. The fair value of the Group's holdings in portfolio companies at, and cash realisations to, 31 December 2013 represents approximately 2.7 times the total cash invested by the Group into its portfolio companies since 2001. Approximately 79 per cent. of the value in IP Group's portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. As at 31 December 2013, the aggregate value of the companies in which IP Group had an investment exceeded £1.7 billion2.

¹ Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited consolidated management accounts of the Group for the year ended 31 December 2013.

² Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited consolidated management accounts of the Group for the financial year ended 31 December 2013 and grossed up to reflect the overall value of such portfolio companies.

IP Group's current portfolio falls broadly into the following three categories:

• Pre-seed: these comprise businesses or pre-incorporation projects that are generally at a very early stage of development. Opportunities at this stage typically involve investments of less than £150,000 from IP Group, predominantly allowing for proof of concept work to be carried out. Incubation projects generally have a duration of nine to eighteen months, following which the opportunity is progressed to seed financing, terminated or retained at the pre-seed stage for a further period to allow additional proof of concept work to be carried out.
• Seed: these comprise businesses which have typically received financing of up to £1.0 million in total, primarily from IP Group, in order to continue to progress towards agreed commercial and technology milestones and to enable the recruitment of management teams and early commercial engagement; and
• Post-seed: these comprise businesses which have received some level of further funding from co investors external to IP Group, with total funding received generally in excess of £1.0 million. Although each business can vary significantly in its rate and manner of development, such additional funding is generally used to progress towards key milestones and commercial validation, to build senior level capability in the business and to attract experienced nonexecutive directors to their boards. This category is further broken down into post-seed private and post-seed quoted companies. Post-seed quoted companies consist of companies quoted on either AIM or the ISDX Markets.

Over the last 13 years, IP Group has developed a rigorous opportunity appraisal process that is designed to enable the assessment and development of technology businesses, initially with low levels of cash investment. During this early stage development phase, IP Group works closely with the businesses to help shape the strategic direction of the opportunity, occasionally taking an interim management role until such time as the business reaches a sufficient stage of maturity and has the resources to recruit an external leadership team. Through this approach, IP Group seeks to progressively eliminate risk, to monitor progress against milestones and to revise strategic direction based on commercial feedback, whilst minimising capital deployed at the earlier stages of such a business' development, with a view to building a robust portfolio of successful post-seed companies.

At the appropriate stage, IP Group will then utilise its in-house executive search consultancy, IP Exec, to recruit experienced and high calibre individuals to lead its developing businesses alongside founders and the Group team members, who continue to provide strategic guidance in an executive or non-executive capacity. Further, IP Group, through its in-house division, IP Impact, has developed a series of innovative programmes that, by working with the CEOs and boards of portfolio companies, seek to help accelerate company growth. In addition, the Group's in-house capital markets function may assist the Group's portfolio companies, primarily those at the post-seed stage, by providing corporate finance advice in connection with fundraisings and/or exits, including facilitating introductions to co-investors. The Group also provides operational, legal, business and company secretarial support to its companies with a view to minimising the most common administrative factors that can contribute to early-stage company failure.

As at 31 December 2013, IP Group's portfolio of 72 companies consisted of 8 pre-seed businesses, 20 seed businesses and 44 post-seed businesses of which 18 were quoted. Of the 44 post-seed businesses, the top ten by value represented approximately 79 per cent. of the IP Group's overall portfolio value. Further details on these ten companies, including a description of their businesses, amounts invested and realised by IP Group during the year ended 31 December 2013 and the values of IP Group's holdings as at 31 December 2013 is set out in paragraph 22 of Part II of this document.

2.4 Fund management

IP Group also manages certain third-party funds where the Directors believe such funds provide strategic benefits to IP Group's core business. These funds broaden the sources of financing potentially available to IP Group's existing portfolio companies and also provide specialist limited partner investors with access to opportunities in IP Group's existing portfolio and enable them to benefit from IP Group's expertise in IP sourcing and business building. Fund management also leverages IP Group's existing competencies to provide additional recurring income and, potentially, performance-related fees. Through Top Technology Ventures, IP Group's FCA-regulated venture capital fund management subsidiary, IP Group currently manages three funds, the £31 million IP Venture Fund, the £25 million North East Technology Fund and the £30 million IP Venture Fund II.

IP Venture Fund's primary investment objective was to provide up to 25 per cent. of the capital to be invested in post-seed financing rounds of spin-out companies from IP Group's partner universities. IP Venture Fund is no longer making investments in new portfolio companies but will continue to make follow-on investments in its existing portfolio. IP Venture Fund II is a successor fund to IP Venture Fund and invests alongside IP Group in new spin-out companies, from pre-seed stage through seed and post-seed stage, from IP Group's university partnerships and other collaborations, with an investment ratio of 30:70 (IP Group: IP Venture Fund II).

The North East Technology Fund invests in technology companies in the North East region of the UK, from seed through to growth stages of development, and may include opportunities from the leading research universities in that region.

2.5 Modern Biosciences plc ("MBS")

In 2006, IP Group established Modern Biosciences plc, a subsidiary company, for the purposes of inlicensing and developing intellectual property relating to new therapeutic compounds. Since that date, MBS has been developing a family of compounds that act via a novel target that the Board of IP Group believes is one of the most exciting emerging targets in immunology and has already been the focus of several papers published in Nature. Currently, the Board of IP Group believes that MBS has the only known ligands against these targets. MBS expects to take its lead candidate into the clinic in 2014. MBS has also identified ways to use its expertise in the novel target biology to pursue other members of this family of compounds, each of which has a differing role in various inflammatory diseases.

2.6 The Directors and management team

IP Group is led by an experienced board which currently comprises a Non-Executive Chairman, Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, Managing Director, Top Technology Ventures and three additional Non-Executive Directors. The Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of technology-based businesses.

The Board is supported by an experienced management team, including a highly qualified team specialising in the life or physical sciences sectors that has primary responsibility for sourcing, evaluating and building new and early stage opportunities (comprising pre-seed and seed). In addition, IP Group leverages its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of IP Group's spin-out companies.

3. BACKGROUND TO, AND REASONS FOR, THE CAPITAL RAISING

The Group has built a platform for the systematic commercialisation of leading technology innovations which, to date, have been primarily sourced from within universities with which the Group has Partnerships.

The Board believes that there continues to exist a significant opportunity to accelerate the growth of the Group by increasing its overall rate of investment in both its current portfolio and in new early stage opportunities that progress to the post-seed stage, whilst still seeking to preserve the returns that it has historically been able to achieve. As companies within the Group's portfolio mature, they generally require an increased level of investment, commensurate with their advancing stage of development, in order to achieve their technical, commercial and strategic objectives. The Board considers that, where such companies continue to make progress towards achieving these objectives, there can be advantages for the Group in maintaining significant minority equity stakes in these companies in order to seek to maximise its level of returns.

The Board considers that the Group remains in a highly advantageous position to assess the merits of further investments in its post-seed portfolio companies, given its well-established and in depth understanding of the relevant company in each case. These investment opportunities are typically more mature (in that technology proof-of-concept has generally been achieved and demonstrated) and additional capital is required to bring the technology to, or towards, commercial validation. The Capital Raising will enable the Group to continue to have flexibility to lead these subsequent investment rounds in both existing and future post-seed companies, decreasing its reliance on external capital and allowing it to maintain significant minority equity stakes with a view to continuing to generate strong equity returns.

The Group will continue to seek to identify compelling IP based opportunities arising from its current Partnerships. In addition, the Group may source further opportunities from other research intensive institutions and may explore the possibility of either extending its existing Partnerships or entering into additional partnerships or other collaborative arrangements with such institutions.

The Directors believe that the increased strength of its balance sheet following completion of the Capital Raising will enhance the Group's ability to attract new early stage commercialisation opportunities from, and collaborations with, research intensive institutions and its ability to attract experienced management teams and co-investment partners, as appropriate, into portfolio companies as they develop.

In addition, the Group aims to increase its exposure to therapeutics assets building on its track record in the biotechnology sector resultant from the approximately £357 million sale of Proximagen Group plc in 2012 and the progress of MBS as described above. Market sentiment in the biotechnology sector is at a high, with 2013 the best year for sector IPOs in over a decade and the NASDAQ biotechnology index up by 65 per cent. over the period. The year saw 37 biotechnology IPOs, raising \$2.7 billion in gross proceeds and eclipsing the 26 biotech IPOs and \$1.9 billion raised during the previous sector high in 2000. Against this backdrop and given its existing track record as aforementioned, the Board of IP Group considers that increasing its capital allocation to biotechnology is attractive at this time. The Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to leverage its existing expertise and assets to build innovative, therapeutically aligned, biotechnology companies. The objective for each such company would be to grow it to the point at which its products might be licensed or acquired by a large pharmaceutical company, with precedent demonstrating that deal values at the earlystage are in the region of \$88 million and as high as \$450 million at Phase 2. Alternatively such a company may be grown to the stage where it is mature enough to continue as a standalone entity.

Consistent with the ambition of the Group to operate internationally, IP Group has opened up an office and established a presence along the North East coast corridor of the US. The Board of IP Group believes that this area is a rich source of potentially world-class IP which has not been systematically tapped to date. Furthermore, the Board of IP Group believes that this geographically focussed footprint will enable the Group to establish its brand and build partnerships with key global institutions. The first step towards this was the Group's entry into of commercialisation agreements with each of the University of Pennsylvania and Columbia University, as described above, both of whom featured in the FT's list of top 20 universities in 2012/2013. The Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to complete successful pilot phases with each of these universities, building both strong relationships with each over this time and its reputation in the US market place, and also to explore accessing additional potentially world-class intellectual property from other research intensive universities in this geographical area.

The Capital Raising and the Acquisition are not interconditional and neither is contingent on the other. The Capital Raising is conditional upon Shareholders passing Resolutions 1, 2 and 3 at the General Meeting.

4. USE OF PROCEEDS

IP Group is proposing to raise up to approximately £75.0 million (before expenses) in order to:

• Continue to increase investment into the Group's UK IP commercialisation business to:
• i. maintain or increase its stakes through subsequent financing rounds in those post-seed investment opportunities which the Board considers to be the most promising, including those in the Fusion IP portfolio assuming completion of the Acquisition; and
• ii. continue to expand its access to, and provide capital to enable the development of, technology originating from its partner universities or other research intensive institutions (including, where appropriate, through the establishment of new, or extensions of existing, partnerships or other collaborative relationships with such institutions).
• Provide capital to develop novel therapeutics, which could be at any development stage from "earlyhit" molecules to Phase 3 candidates, where the therapeutic modality and target offer a strategic advantage in rare diseases and/or unmet medical needs. Such opportunities may be developed through spin-out companies or majority-owned single-asset development vehicles.
• Provide capital to fund the growth of the Group's developing US business; specifically to advance its recently announced partnerships with the University of Pennsylvania and the University of Columbia, including providing capital to spin-out companies from these universities, and, where appropriate, towards the establishment of new partnerships or other collaborative relationships with research intensive institutions in the US.

In addition, it is possible that the Group may use some of the proceeds of the Capital Raising to expand its fund management operations should the opportunity arise and be deemed by the Directors to be in the Group's best interests (although no such opportunity has been identified as at the date of this document).

The Board currently anticipates that it will utilise (subject, amongst other things, to the individual circumstances of, and rate of realisations obtained from, its portfolio companies) approximately 66 per cent. of the net proceeds of the Capital Raising in continuing to increase investment into the Group's UK IP commercialisation business, approximately 20 per cent. capital towards investment in the development of novel therapeutics and approximately 14 per cent. capital to fund the growth of the Group's developing US business.

The Board has the ability to increase the size of the Capital Raising by up to one third should there be sufficient demand by the issue of up to a further 15,151,204 Capital Raising Shares at the Issue Price so that gross proceeds would be approximately £100.0 million and these proceeds would be used for the same purposes.

5. CURRENT TRADING AND PROSPECTS

5.1 Interim Management Statement announced on 1 November 2013

On 1 November 2013, IP Group issued its interim management statement for the period from 1 July 2013 to 31 October 2013. The information below is extracted from that announcement.

Portfolio update

As at 30 October 2013, the fair value of the Group's portfolio was £258.2 million compared to £191.9 million at 30 June 2013, representing a net unrealised fair value increase of £52.7 million excluding the investments and realisations described below. This overall increase was largely driven by the £33.3 million fair value gain as a result of Oxford Nanopore Technologies Limited's October financing and increases in the share prices of a number of the Group's quoted portfolio companies during the period totalling £19.1 million. These were partially offset by decreases in the fair values of the Group's holdings in AIM-quoted Modern Water plc (£0.5 million) and Evocutis plc (£0.6 million), as a result of share price decreases.

During the period from 1 July 2013 to 30 October 2013, the Group provided pre-seed, seed and development capital totalling £14.2 million to 18 portfolio companies, including £5 million into Cambridge Innovation Capital plc which represents an increase from £5.6 million was provided to 16 companies during the comparative period from the previous years. Investments for the year to date now total £25.0 million (Q3 2012 IMS: £21.4 million). The Group generated proceeds of £0.6 million (Q3 2012 IMS: £16.2 million). As at the date of this document, the Group's portfolio consists of holdings in 72 companies, compared to 70 as at 30 June 2013.

Significant developments in the Group's unquoted portfolio companies since 30 June 2013 have included:

• In October 2013, Oxford Nanopore Technologies Limited ("Oxford Nanopore"), a spin-out company from the University of Oxford that specialises in nanopore-based electronic molecular analysis systems, announced that it would open registration for its 'MinION Access Programme' in late November with a substantial number of selected participants due to receive a MinION Access Programme package for a refundable \$1,000 deposit. Earlier in the month, Oxford Nanopore announced it had raised £40 million in new funding via a private placement of ordinary shares, bringing the total funds raised by Oxford Nanopore since its foundation to £145 million. The Group has a 19.6% undiluted beneficial stake in Oxford Nanopore, valued at £104.3 million.
• Applied Graphene Materials plc ("Applied Graphene"), a spin-out from Durham University that has developed a proprietary process for the manufacture of high specification graphene, announced in October its intention to raise funds and seek admission of its shares to trading on AIM. Applied Graphene will utilise the funding to scale up production and accelerate commercialisation with blue chip partners.

Significant developments in the Group's quoted portfolio companies since 30 June 2013 have included:

• In September 2013, Retroscreen Virology Group plc ("Retroscreen"), a spin-out from Queen Mary, University of London, that has pioneered the commercialisation of the Viral Challenge Model which enables research into viral infection and enables pharmaceutical companies to accelerate and reduce the cost of bringing antiviral therapeutics and vaccines to market, announced its half-yearly results. The announcement noted that Retroscreen had increased revenue by 237 per cent. to £12.01 million, increased gross profit by 286 per cent. to £3.4 million, completed the largest RSV challenge study ever performed with an investigational drug, which was also Retroscreen's largest VCM study to-date, and that it had conducted the largest ever investigation into influenza transmission, in collaboration with the University of Nottingham and funded by the United States Centers for Disease Control and Prevention. Retroscreen announced in July that it raised £25.5 million before expenses, with the Group, together with its managed funds, contributing £1.5 million of the placing. The Group's 18.3 per cent. interest in Retroscreen was valued at £31.5 million at 30 October 2013.
• In October 2013, University of Leeds spin-out Tissue Regenix Group plc ("Tissue Regenix") announced that full trial results into the effectiveness of DermaPureTM in healing treatment resistant chronic wounds had been published in the peer reviewed journal "Wound Repair and Regeneration". The paper shows 60 per cent. of patients with chronic wounds were completely healed and patients treated saw an average 87 per cent. reduction in the size of their wounds. The company commented that it remains on course for commercial launch of DermaPure in the US during the first half of 2014. The fair value of the Group's 13.8 per cent. holding in Tissue Regenix was £10.6 million at 30 October 2013.
• In July 2013, Avacta Group plc ("Avacta"), which develops detection and analysis technology and services, announced that it had raised gross proceeds of £4.7 million primarily to develop its Affimer technology of which IP Group, together with its managed funds, contributed £1.0 million. Avacta subsequently announced its first licence deal for Affimers with Blueberry Therapeutics, a private UK biotechnology company. Avacta's full year results to 31 July 2013 saw a small decrease in revenues to £2.7 million (2012: £3.1 million) and an increased loss before tax of £1.9 million (2012: £1.6 million). The Group's 27.6 per cent. interest in Avacta was valued at £9.4 million at 30 October 2013.

• Ceres Power Holdings plc ("Ceres"), a developer of clean, efficient, cost-effective fuel cell technology, announced that it had appointed Philip Caldwell as its new CEO; signed a commercial agreement with Korea's largest boiler manufacturer KD Navien in a landmark deal in support of its new strategy; found commercial traction in Japan with a number of global OEMs in technology validation and test activities and that it had signed a collaboration agreement with the University of Connecticut to showcase Ceres' technology and facilitate access to US OEMs and the Department of Energy programs to drive product development in the US. The fair value of the Group's 24.7 per cent. holding in Ceres was valued at £11.1 million at 30 October 2013.

Operational update

In October 2013, the Group completed a strategic investment of £5.0 million in Cambridge Innovation Capital plc ("CIC"), alongside the University of Cambridge Endowment Fund, ARM Holdings plc, Invesco Perpetual and Lansdowne Partners. CIC, which has raised £50 million to date and in which the Group has an 8 per cent. stake, will support the growth of innovative businesses based in the 'Cambridge Cluster' by investing long-term equity finance to help companies bridge the critical middle stage of commercial development. The University of Cambridge will support CIC through its commercialisation office, Cambridge Enterprise. In addition, the Group and CIC have entered into a Memorandum of Understanding to share information on investment and co-investment opportunities in the Cambridge Cluster and, where practicable and alongside other co-investors, to provide each other with access to such co-investment opportunities.

5.2 Developments since the Interim Management Statement announced on 1 November 2013

On 20 November 2013, Applied Graphene floated on AIM raising £11.0 million (before IPO expenses), with a market capitalisation at admission of £26.2 million. Applied Graphene's shares performed strongly between its IPO and 31 December 2013 increasing by approximately 180 per cent. from the issue price, valuing the company at approximately £73 million and valuing IP Group's shareholding as at 31 December 2013 at £14.9 million.

The Group announced on 3 December 2013 that it had signed IP commercialisation agreements with the University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme and with Columbia Technology Ventures, the technology transfer office of Columbia University. These partnerships, which have an initial pilot phase of 18 months, will focus on identifying early-stage, proof of principle opportunities based on intellectual property developed at the University of Pennsylvania and Columbia University.

5.3 Portfolio and cash update1

At 31 December 2013, the Group's portfolio consisted of holdings in 72 companies compared to 67 at 31 December 2013. The portfolio was valued at approximately £286 million (2012: £182 million), representing a net unrealised fair value increase for the year of approximately £82 million excluding the investments and realisations described below.

During the year to 31 December 2013, the Group provided pre-seed, seed and post-seed capital totalling approximately £27 million to its portfolio companies, including a £5 million investment into Cambridge Innovation Capital plc. The Group generated cash proceeds of approximately £5 million (2012: £17 million). Cash, cash equivalents and deposits at 31 December 2013 totalled approximately £24 million (2012: £48 million).

5.4 Outlook

The Directors believe that the UK continues to produce a wealth of potentially world class IP from its universities and other research intensive institutions. Whilst macroeconomic sentiment in the UK is

¹ Portfolio and cash information is extracted from the Group's unaudited consolidated management accounts for the year ended 31 December 2013.

improving, funding for higher-risk, early stage businesses continues to be constrained and trading circumstances for many small businesses remain difficult. Against this backdrop, the Directors consider that the Group has an increasingly strengthened position given its track record, strong cash position (assuming completion of the Capital Raising) and available funds under management.

The Group continues to expand its access to leading scientific innovation by broadening and deepening its arrangements with its existing university partners and other research intensive institutions and entering into collaborations with new partners. These arrangements continue to provide opportunities for the Group to invest in early stage projects and companies based on high impact technologies. The Board is confident that this flow of opportunities, coupled with the Group's increased ability to invest larger sums more frequently in its portfolio companies as a result of the Capital Raising, will continue to drive the Group's growth. The Board is excited at the prospect of the acquisition of Fusion IP which it considers represents an opportunity to create a stronger UK commercialisation company with greater critical mass. Accordingly, the Board remains confident in the prospects for the Group.

6. PRINCIPAL TERMS AND CONDITIONS OF THE CAPITAL RAISING

IP Group is proposing to raise gross proceeds of up to approximately £75.0 million (approximately £72.9 net of expenses) by the issue of up to 45,454,856 Capital Raising Shares way of the Firm Placing and the Placing, Open Offer and Offer for Subscription at 165 pence per share, although the Directors have the ability to increase the size of the Issue by up to one third such that the gross proceeds would be approximately £100.0 million (approximately £97.4 million net of expenses) should there be sufficient demand. Assuming that the Capital Raising size is approximately £75.0 million, 30,303,030 Capital Raising Shares will be issued through the Firm Placing and up to 15,151,826 Capital Raising Shares will be issued through the Placing, Open Offer and Offer for Subscription. The actual number of Capital Raising Shares to be issued pursuant to the Capital Raising will be notified by the Company via a Regulatory Information Service announcement prior to Capital Raising Admission.

The Board considers the Firm Placing and Placing, Open Offer and Offer for Subscription to be a suitable fundraising structure as it will allow access to a wide variety of new investors to broaden the Company's shareholder base whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Open Offer and the Offer for Subscription.

Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Qualifying Shareholders are not being offered the right to subscribe for the Firm Placed Shares. Qualifying Shareholders applying for their Open Offer Entitlements may also apply, under the Excess Application Facility, for Excess Shares in excess of their Open Offer Entitlements as described below. The Company is also seeking to place Placing Shares through the Placing and making the Offer for Subscription as described below in the UK only.

All elements of the Capital Raising have the same Issue Price. The Issue Price was set having regard to the prevailing market conditions and the size of the Issue, and represents a discount of approximately 8.3 per cent. to the Closing Price of 179.9 pence per Share on 22 January 2014 (being the last Business Day before the announcement of the Capital Raising). The Board believes that both the Issue Price and the discount are appropriate.

The Capital Raising Shares, when issued and fully paid, will rank in full for all dividends or distributions made, paid or declared after the date of the Prospectus and otherwise pari passu in all respects with the Existing Shares.

On the basis that the Capital Raising size is approximately £75.0 million, the Capital Raising is expected to result in 45,454,856 Capital Raising Shares being issued (representing approximately 12.1 per cent. of the existing issued share capital) assuming that it is fully subscribed. On the basis that the Capital Raising size is increased to a maximum of £100.0 million, the Capital Raising is expected to result in 60,606,060 Capital Raising Shares being issued (representing approximately 16.2 per cent. of the existing issued share capital). As noted above the Directors will have the discretion to increase the size of the Capital Raising from £75.0 million to up to £100.0 million. The Directors may allocate any increase to and between the Excess Application Facility, the Placing and/or the Offer for Subscription as they deem fit.

Some questions and answers in relation to the Open Offer, together with details of further terms and conditions of the Open Offer, including the procedure for application and payment and the procedure in respect of entitlements not taken up, are set out in Appendix 1 and Appendix 2 to, this document and, where relevant, are set out in the Application Form.

Details of the further terms and conditions of the Offer for Subscription, including the procedure for application and payment and the procedure in respect of Subscription Entitlements, are set out in Appendix 4 of this document and, where relevant, are set out in the Subscription Form. The Subscription Form is contained in Appendix 4 of this document and will be available at the Company's website www.ipgroupplc.com.

Firm Placing

The Firm Placees have conditionally agreed to subscribe for 30,303,030 Capital Raising Shares in aggregate at the Issue Price (representing gross proceeds of approximately £50.0 million). The Firm Placed Shares are not subject to clawback to satisfy the valid applications by Qualifying Shareholders under the Open Offer and are not part of the Placing, Open Offer and Offer for Subscription. The Firm Placing is expected to raise £50.0 million before expenses. The Firm Placing is underwritten by Numis. The terms and conditions of the Firm Placing and the Placing are set out in Appendix 3 to this document.

Open Offer

The Directors recognise the importance of pre-emption rights to Shareholders and consequently 15,151,826 New Shares are being offered to existing Shareholders by way of the Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the Capital Raising by both subscribing for their respective Open Offer Entitlements and by subscribing for Excess Shares under the Excess Application Facility, subject to availability.

To the extent that valid applications are not received in respect of Open Offer Shares under the Open Offer, such Open Offer Shares may be allocated to Qualifying Shareholders to meet any valid applications under the Excess Application Facility.

Open Offer Entitlements

Qualifying Shareholders are being given the opportunity on, and subject to, the terms and conditions of the Open Offer to apply for Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Shares on the Record Date on the basis of:

4.0377 Open Offer Shares for every 100 Existing Shares

Open Offer Entitlements under the Open Offer will be rounded down to the nearest whole number and any fractional entitlements to Open Offer Shares will not be allocated but will be aggregated and made available under the Excess Application Facility and/or the Placing and/or the Offer for Subscription.

If you have sold or otherwise transferred all of your Existing Ordinary Shares before the ex-entitlement date, you are not entitled to participate in the Open Offer.

Qualifying Shareholders are also being offered the opportunity to subscribe for Excess Shares in excess of their Open Offer Entitlements pursuant to the Excess Application Facility as described below.

Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares, may do so by completing the relevant sections on the Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess CREST Open Offer Entitlements credited to their stock account in CREST and should refer to paragraphs 2, 4.1.4 and 4.2.3 of Appendix 2 of this document for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements.

The maximum amount of Capital Raising Shares to be issued under the Excess Application Facility (the "Maximum Excess Application Number") will be limited to: (a) the maximum size of Issue (as may be increased by the Directors by up to one third to 60,606,060 Capital Raising Shares); less (b) the aggregate of the Firm Placed Shares, the Capital Raising Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any Capital Raising Shares that the Directors determine to issue under the Placing and/or the Offer for Subscription. Excess Applications will therefore only be satisfied to the extent that: (a) other Qualifying Shareholders do not apply for their Open Offer Entitlements in full; (b) where fractional entitlements have been aggregated and made available under the Excess Application Facility; (c) the Directors do not exercise their discretion to allocate Excess Shares to the Placing or the Offer for Subscription and/or (d) the Directors exercise their discretion to increase the size of the Issue and allocate any further Capital Raising Shares to the Excess Application Facility. Qualifying Shareholders can apply for up to the Maximum Excess Application Number of Capital Raising Shares under the Excess Application Facility, although if applications exceed the maximum number available, the applications will be scaled back on a pro rata basis. Excess monies in respect of applications which are not met in full will be returned to the applicant (at the applicant's risk) without interest as soon as practicable thereafter by way of cheque or CREST payment, as appropriate.

Placing

To the extent that either (a) the Directors exercise their discretion to increase the size of the Issue and allocate any of such increase to the Placing and/ or (b) any Capital Raising Shares remain unallocated via the Excess Application Facility and have not been allocated to the Offer for Subscription, such Capital Raising Shares will be allocated and made available under the Placing. Shares will be allocated to Non-Firm Placees pursuant to, and in accordance with, the Placing Agreement. The Placing will not be underwritten by Numis and may be scaled back in favour of the Offer for Subscription. The terms and conditions of the Placing are contained in Appendix 3.

Offer for Subscription

To the extent that either (a) the Directors exercise their discretion to increase the size of the Issue and allocate any of such increase to the Offer for Subscription and/ or (b) any Capital Raising Shares remain unallocated via the Excess Application Facilty and have not been allocated to the Placing, such Capital Raising Shares will be allocated to and made available under the Offer for Subscription. The Offer for Subscription may be scaled back in favour of the Placing.

The Offer for Subscription is only being made in the UK but, subject to applicable law, the Company may allot New Shares on a private placement basis to applicants in other jurisdictions. The terms and conditions of application under the Offer for Subscription are set out in Appendix 4 of this document and, where relevant, in the Subscription Form. These terms and conditions should be read carefully before an application is made. Investors should consult their stockbroker, bank manager, solicitor, accountant or other financial adviser if they are in doubt.

Dilution

If a Qualifying Shareholder does not take up his Open Offer Entitlement, such Qualifying Shareholder's holding will be diluted by up to approximately 10.8 per cent. as a result of the Capital Raising (assuming the gross proceeds of the Capital Raising are approximately £75.0 million and excluding the impact of the Consideration Shares). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlement in respect of the Open Offer (and does not receive any other Capital Raising Shares pursuant to the Capital Raising) will suffer dilution of up to approximately 7.2 per cent. to his shareholding in the Company as a result of the Firm Placing assuming the gross proceeds of the Firm Placing are £50.0 million.

If the Directors increase the Capital Raising by up to one third through the issue of an additional 15,151,204 Capital Raising Shares at the Issue Price, the size of the Capital Raising will be approximately £100.0 million and if a Qualifying Shareholder does not take up his Open Offer Entitlement, such Qualifying Shareholder's holding will be diluted by up to approximately 13.9 per cent. as a result of the Capital Raising if subscribed in full (excluding the impact of the Consideration Shares). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlement in full in respect of the Open Offer (but does not receive for any other New Shares under the Excess Application Facility or any other element of the Capital Raising) will suffer dilution of approximately 10.4 per cent. to his shareholding in the Company as a result of the Firm Placing and the additional 15,151,204 Capital Raising Shares issued.

Shareholders will be diluted by 8.5 per cent. (assuming the Capital Raising is £75.0 million and is fully subscribed) by the issue of the Consideration Shares as and when the Acquisition completes.

Fractions

Fractions of Open Offer Shares will not be allocated to Qualifying Shareholders in the Open Offer and fractional entitlements under the Open Offer will be aggregated and made available under the Excess Application Facility and/or the Placing and/or the Offer for Subscription.

Notwithstanding the foregoing, if Qualifying Shareholders do not take up their Open Offer Entitlement and any premium is obtained over the Issue Price (of more than £5 (net of expenses) such amount shall be for the account of the relevant Qualifying Shareholder.

Basis of allocation under the Capital Raising

The Placing may be scaled back in favour of the Offer for Subscription and the Offer for Subscription may be scaled back in favour of the Placing. The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders and is not subject to scaling back in favour of either the Placing or the Offer for Subscription. Any Capital Raising Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlements and under the Excess Application Facility will be reallocated to the Placing and/or the Offer for Subscription and made available thereunder.

The Directors have the discretion to determine the basis of any scaling back of or reallocation of Open Offer Shares to the Placing and/or the Offer for Subscription. In exercising this discretion, the Directors generally intend to give priority to existing Shareholders over prospective new Shareholders, although the Directors will seek to balance the benefits to the Company of allowing existing Shareholders to maintain or increase the size of their relative Shareholdings with expanding the shareholder base of the Company.

Conditionality

The Capital Raising is conditional upon:

• the passing of the Resolutions without amendment to be proposed at the General Meeting to be held on 12 February 2014;
• the Placing Agreement having become unconditional in all respects save for the condition relating to Capital Raising Admission and not being terminated in accordance with its terms before Capital Raising Admission occurs; and
• Capital Raising Admission occurring by not later than 8.00 a.m. on 14 February 2014 (or such later time and date as the Company and Numis may agree, not being later than 8.00 a.m. on 28 February 2014).

Prior to Capital Raising Admission, Numis may terminate the Placing Agreement in certain defined circumstances. Following Capital Raising Admission, the Placing Agreement cannot be terminated.

If the conditions of the Placing Agreement are not fulfilled on or before 8.00 a.m. on 28 February 2014, application monies will be returned to applicants (at the applicant's risk) without interest as soon as possible thereafter.

The Capital Raising and the Acquisition are not interconditional and neither is contingent on the other. The Capital Raising is conditional upon IP Group Shareholders passing Resolutions 1, 2 and 3 at the General Meeting.

Important notice

The Capital Raising Shares are not being made available in whole or in part to the public except under the terms of the Open Offer and the Offer for Subscription. The Open Offer and the Offer for Subscription are not being made to persons in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. The Offer for Subscription is solely available in the United Kingdom save as provided in Appendix 4. Accordingly, Application Forms are not (subject to certain exceptions) being sent to, and Open Offer Entitlements, Excess CREST Open Offer Entitlements and Offer for Subscription Entitlements are not being credited to, Overseas Shareholders. The attention of Overseas Shareholders is drawn to paragraph 6 of Appendix 2 of this document and the attention of Overseas Applicants is drawn to paragraph 6 of Appendix 4 of this document.

The Open Offer is not a rights issue. Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims and the Application Form is not a document of title and cannot be traded. Qualifying Shareholders should be aware that, in the Open Offer, unlike in the case of a rights issue, any Open Offer Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders, but will be taken up under the Excess Application Facility and/or the Placing and/or the Offer for Subscription, with the proceeds retained for the benefit of the Company unless any premium of £5 or more (net of expenses) is received over the Issue Price in which case the net proceeds shall be for the account of the relevant Qualifying Shareholder.

To be valid, completed Application Forms and payment in full must be received by Capita Asset Services no later than 10.00 a.m. on 10 February 2014. Further information on the Open Offer, including the procedure for application and payment, is set out in Appendix 2 of this document and, where applicable, the Application Form.

7. FINANCIAL IMPACT OF THE CAPITAL RAISING

The Capital Raising will result in an increase in cash and other short term funds of approximately £72.9 million (assuming the Capital Raising of a size of approximately £75.0 million is fully subscribed) with a corresponding increase in the net assets of IP Group. The attention of Shareholders is drawn to pages 123 and 124 of Part VI of this document for information on these changes.

8. PROPOSED ACQUISITION OF FUSION IP

8.1 Terms of the Acquisition

Under the terms of the Acquisition, Scheme Shareholders on the register of members of Fusion IP as of the Reduction Record Time will be entitled to receive:

for each Scheme Share: 0.446 of a Consideration Share

The consideration under the terms of the Acquisition values each Fusion IP Share at 80.2 pence, based on the Closing Price of 179.9 pence per Share on 22 January 2014 (being the latest practicable date prior to the announcement of the Acquisition), representing a premium of approximately 27.4 per cent. to the Closing Price of 63.0 pence per Fusion IP Share on 22 January 2014 (being the latest practicable date prior to the announcement of the Acquisition).

The consideration for the Acquisition represents a premium of approximately:

• 22.6 per cent. to the average Closing Price of 65.5 pence per Fusion IP Share for the one month period up to and including 22 January 2014 (being the latest practicable date prior to the announcement of the Acquisition); and

• 21.1 per cent. to the average Closing Price of 66.3 pence per Fusion IP Share for the six month period up to and including 22 January 2014 (being the latest practicable date prior to the announcement of the Acquisition).

The Acquisition values Fusion IP's existing issued share capital at approximately £87.8 million, based on the Closing Price of a Share on 22 January 2014 (being the latest practicable date prior to the announcement of the Acquisition).

If the Scheme becomes Effective, the Acquisition will result in the allotment and issue of approximately 38,998,844 Consideration Shares to Independent Fusion IP Shareholders, representing approximately 8.5 per cent. of the Enlarged Share Capital as further enlarged by the issue of Consideration Shares, assuming that the Capital Raising is not increased in size and is subscribed in full.

Following completion of the Acquisition, the Shares will continue to be admitted to the premium listing segment of the Official List and to be traded on the London Stock Exchange's main market for listed securities. It is anticipated that IP Group will also remain a member of the FTSE 250 index.

The Acquisition is not conditional or contingent upon the Capital Raising nor the passing of the Resolutions at the General Meeting.

8.2 Background to, and reasons for, the Acquisition

Both IP Group and Fusion IP have a reputation for building outstanding businesses based on intellectual property primarily sourced from leading scientific research institutions and both companies are also recognised as key opinion leaders in this emerging asset class. In the last quarter of 2009, IP Group acquired a strategic stake in Fusion IP and entered into a co-investment agreement with Fusion IP relating to spin-out companies originating from Fusion IP's university partners, giving IP Group partial access to the scientific innovation from these leading research universities. Since 2009, IP Group has developed a strong and successful working relationship with Fusion IP, having strategic influence through its board representative and having co-invested in a number of new and existing opportunities sourced from Fusion IP's university partners. Given this, the Board of IP Group considers that a full acquisition of Fusion IP at this time represents an opportunity to create a stronger UK based IP commercialisation company with greater critical mass which the Directors believe will lead to enhanced value for the shareholder base of the Enlarged Group.

Specifically, the Board of IP Group believes that the full acquisition of Fusion IP will provide the Group with the following key benefits:

• a stronger combined team as a result of the highly complementary skill sets and experience of Fusion IP's management, scientific evaluation and business development teams;
• a larger and more diversified portfolio as a result of the inclusion of Fusion IP's developing portfolio of assets in similar sectors to those on which the Group is currently focused; and
• greater exposure to spin-out companies from Fusion IP's four partner universities, the University of Sheffield, the University of Nottingham, Cardiff University and Swansea University, and enhanced influence in the selection process for new spin-out companies from such universities going forward.

Overall, the Directors believe that the combination of the two businesses will create an entity with a greater ability to attract the best talent, to access a wide pool of investors and to access potentially world-class IP than would be possible by the two entities on a standalone basis. Furthermore, the Enlarged Group will continue to work with, and will be capable of providing, an enhanced and broader offering to leading research intensive institutions, both in the UK and internationally.

In addition, the Board of IP Group believes that the existing strong working relationship and similar cultures and ideologies of the two companies will lower the risks generally associated with business integration. Accordingly, the Board of IP Group envisages that the Enlarged Group will move towards full integration of Fusion IP within approximately 6 months of the Effective Date.

Further information on Fusion IP, its university partners, its current portfolio and its management team are set out in Part III of this document.

8.3 Additions to the Board, employees and locations of business

It is proposed that on completion of the Acquisition, the CEO of Fusion IP, David Baynes, will join the board of the Enlarged Group as an additional executive director and that the Chairman of Fusion IP, Doug Liversidge CBE, will join the board of the Enlarged Group as an additional non-executive director.

The Board has given assurances to Fusion IP that, following completion of the Acquisition, the existing employment rights of Fusion IP's employees will be safeguarded.

The Enlarged Group's head office and registered address will continue to be located in London. The Board of IP Group intend to retain the existing leasehold premises of Fusion IP in Cardiff and Sheffield, together with the licensed premises in Nottingham, providing an enhanced national presence for the Enlarged Group.

8.4 Structure of the Acquisition

It is intended that the Acquisition will be effected by a Court-sanctioned scheme of arrangement between Fusion IP and Scheme Shareholders under Part 26 of the Companies Act. The Scheme will result in IP Group becoming the owner of the whole of the issued and to be issued ordinary share capital of Fusion IP.

The Acquisition is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full a number of new Fusion IP Shares (which is equal to the number of Scheme Shares cancelled) and issuing the same to IP Group in consideration for which the Scheme Shareholders will receive consideration on the basis set out in paragraph 8.1 above. Conditions include (but not limited to):

• 8.4.1 a resolution to approve the Scheme being passed by a majority in number of those Scheme Shareholders who are present and vote at the Court Meeting, either in person or by proxy, representing not less than 75 per cent. in value of the Scheme Shares voted by those Scheme Shareholders;
• 8.4.2 the Special Resolution being passed by the requisite majority of Shareholders at the Fusion IP General Meeting;
• 8.4.3 the Scheme being sanctioned (with or without modification, on terms agreed by IP Group and Fusion IP), and the related Capital Reduction being confirmed, by the Court;
• 8.4.4 copies of each of the Court Orders (together with the Statement of Capital) being delivered to the Registrar of Companies and, if so ordered by the Court, the Reduction Court Order being registered by the Registrar of Companies together with the Statement of Capital;

• 8.4.5 the FCA acknowledging to IP Group or its agent (and such acknowledgement not having been withdrawn) that Scheme Admission will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange having acknowledged to IP Group or its agent (and such acknowledgement not having been withdrawn) that the Consideration Shares will be admitted to trading on the London Stock Exchange's main market for listed securities; and

• 8.4.6 any one of the following conditions having been fulfilled:

• (a) issuance of a decision by the Office of Fair Trading ("OFT") or Competition and Markets Authority ("CMA") that the Acquisition does not constitute a relevant merger situation pursuant to section 23 of the Enterprise Act 2002 (the "Enterprise Act"); or
• (b) issuance of a decision by the OFT or CMA pursuant to sections 22 or 33 of the Enterprise Act that a reference will not be made in respect of the Acquisition either unconditionally or subject to conditions, obligations, undertakings or modifications in terms satisfactory to IP Group pursuant to section 73 of the Enterprise Act; or
• (c) if the Acquisition has been notified to the OFT by way of a merger notice pursuant to section 96 of the Enterprise Act, the earlier of:
  • (i) expiry of the period for the OFT to consider the merger notice as prescribed by section 97 of the Enterprise Act without a reference being made in respect of the Acquisition pursuant to sections 22 or 33 of the Enterprise Act, or
  • (ii) if any of the circumstances specified in section 100(1) of the Enterprise Act applies in respect of that merger notice, issuance of a decision by the OFT pursuant to paragraph 8.4.6 (b) above; or
• (d) expiry of the period prescribed in section 34ZA of the Enterprise Act in which the CMA may issue a decision that a reference will be made in respect of the Acquisition, but without such a decision having been issued, by the CMA pursuant to sections 22 or 33 of the Enterprise Act; and

provided that, in the event that none of the conditions set out in paragraphs 8.4.6(a) to 8.4.6(d) have been met prior to 1 April 2014, completion of the Acquisition should also be conditional on the CMA not having already made an order pursuant to section 72(2) of the Enterprise Act in terms that would prevent the Scheme becoming unconditional and effective.

For ease of reference, the conditions set out in paragraph 8.4.6 of Part I of this document are referred to as "Competition Condition".

To become Effective, the Scheme requires (i) the approval of the Scheme at the Court Meeting by a majority in number of Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy, representing not less than 75 per cent. in value of the Scheme Shares voted by such Scheme Shareholders; and (ii) the passing of the Special Resolution at the General Meeting by Fusion IP Shareholders representing at least 75 per cent. of the votes cast at the Fusion IP General Meeting (either in person or by proxy). The Fusion IP General Meeting will be held immediately after the Court Meeting. In respect of the Special Resolution at the Fusion IP General Meeting voting on the Special Resolution will be conducted by way of a poll and each Fusion IP Shareholders will be entitled to cast one vote for each Fusion IP Share held.

The Scheme will lapse if, among other things:

• the Competition Condition is not satisfied; or
• the Court Meeting and the Fusion IP General Meeting are not held by the 22nd day after the expected date of such meetings to be set out in the Scheme Document (or such later date as may be agreed between IP Group and Fusion IP); or
• the Scheme does not become Effective by 1 May 2014 (or such later date, if any, as IP Group and Fusion IP may agree and, if required, the Court and the Panel may allow),

provided, however, that the deadlines for the timing of the Court Meeting, the Fusion IP General Meeting and the Scheme to become Effective as set out above may be waived by IP Group.

Following the Court Meeting and the Fusion IP General Meeting, the Scheme must be sanctioned by the Court at the Scheme Court Hearing and the associated Capital Reduction must be confirmed by the Court.

The Scheme will only become Effective once an office copy of the Scheme Court Order, an office copy of the Reduction Court Order and the Statement of Capital are delivered to the Registrar of Companies.

Upon the Scheme becoming Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting and the Fusion IP General Meeting.

Upon the Scheme becoming Effective:

• the CREST accounts of the Scheme Shareholders who hold Scheme Shares in uncertificated form will be credited with the Consideration Shares in consideration for their Fusion IP Shares; and
• Scheme Shareholders Scheme who hold their Scheme Shares in certificated form will receive share certificates in respect of Consideration Shares in consideration for their Fusion IP Shares no later than 14 days after the Effective Date.

The Scheme will be governed by English law. The Scheme will be subject to the applicable requirements of the City Code, the Panel, the London Stock Exchange, the AIM Rules, the FCA and the Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules.

8.5 Financial effect of the Acquisition

As at 31 July 2013, Fusion IP had cash and deposit balances of £21.3 million. Since 31 July 2013, Fusion IP has invested £0.3 million in its portfolio, and operating expenses have amounted to £0.9 million (excluding amortisation). At the Effective Date, the resultant cash balance will augment the Group's existing cash balance which as at 31 December 2013 was £24.9m, which shall also be increased by the net proceeds of the Capital Raising. The attention of Shareholders is drawn to pages 123 and 124 of Part VI of this document for information on these changes.

9. PROPOSALS TO BE VOTED ON AT THE GENERAL MEETING

Part X of this document contains a notice convening a general meeting of the Company which is to be held at the Company's offices at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 12 February 2014. The full text of the Resolutions is set out in the Notice of General Meeting.

Resolution 1 – Approval of Capital Raising

Resolution 1 is an ordinary resolution to approve the terms of the Firm Placing and the Placing, the Open Offer (including the Excess Application Facility) and the Offer for Subscription and to direct the Directors to implement the Capital Raising and authorise the exercise the powers conferred by this Resolution and all the powers of the Company to the extent that the Directors (or a duly appointed committee thereof) determine it necessary or desirable to implement the Capital Raising.

Resolution 2 – Authority to allot Capital Raising Shares

Resolution 2 is an ordinary resolution as required by section 551 Companies Act which will, if passed, authorise the Directors to allot Capital Raising Shares pursuant to the Capital Raising. Resolution 2 is subject to the passing of Resolution 1.

Resolution 3 – Disapplication of pre-emption rights for the issue of the Capital Raising Shares

Resolution 3 is a special resolution as required by section 570 of the Companies Act and is conditional upon the passing of Resolution 2. If passed, this Resolution will disapply the statutory pre-emption rights in relation to the allotment of equity securities pursuant to the Capital Raising. The maximum amount of equity securities to which the disapplication will apply is 60,606,060 Capital Raising Shares, being the maximum number of Capital Raising Shares that could be allotted even if the Directors exercised their discretion to increase the size of the Capital Raising to £100 million.

The Company already has sufficient unused existing authority to issue the Consideration Shares pursuant to the resolutions passed at the last annual general meeting.

10. OVERSEAS SHAREHOLDERS

The attention of Overseas Shareholders who have registered addresses outside the United Kingdom, or who are citizens of, or residents or located in, countries other than the United Kingdom, or who are holding Existing Shares for the benefit of such persons (including, without limitation, nominees, custodians and trustees), or have a contractual or legal obligation to forward this document, the Form of Proxy or the Application Form to such persons, is drawn to the information on the cover of this document and which appears in paragraph 6 of Appendix 2 of this document.

In particular, Qualifying Shareholders who have registered addresses outside the UK, or who are citizens of, or resident or located in, countries other than the UK (including, without limitation, the US or any of the Excluded Territories) should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to take up their entitlements in the Open Offer.

11. UK TAXATION

Certain information about UK taxation in relation to the Firm Placing and Placing, Open Offer and Offer for Subscription is set out in paragraph 14 of Part VII of this document. If you are in any doubt as to your tax position, or you are subject to tax in a jurisdiction other than the United Kingdom, you should consult your own independent tax adviser without delay.

12. ACTION TO BE TAKEN

12.1 General Meeting

You will find enclosed with this document a Form of Proxy for use at the General Meeting or any adjournment thereof. Whether or not you propose to attend the General Meeting in person, it is important that you complete and sign the Form of Proxy in accordance with the instructions printed on it and return it to the Company's Registrar, Capita Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible and, in any event, so as to be received not later than 10.00 a.m. on 10 February 2014. The completion and return of a Form of Proxy (or the electronic appointment of a proxy) will not preclude you from attending the General Meeting and voting in person, if you so wish.

Qualifying Non-CREST Shareholders (i.e. holders of Existing Shares who hold their Existing Shares in certificated form)

If you are a Qualifying Non-CREST Shareholder you will receive an Application Form which gives details of your maximum entitlement under the Open Offer (as shown by the number of Open Offer Entitlements set out in Box 4). Under the Excess Application Facility, provided you are a Qualifying non-CREST Shareholder and have agreed to take up your Open Offer Entitlement in full, you may apply for more than the amount of your Open Offer Entitlement should you wish to do so. If you wish to apply for Open Offer Shares under the Open Offer or the Excess Application Facility, you should complete the Application Form in accordance with the procedure for application set out in paragraph 4.1 of Appendix 2 of this document and on the Application Form itself. Completed Application Forms, accompanied by full payment in accordance with the instructions in paragraph 4.1 of Appendix 2 of this document, should be posted in the accompanying pre-paid envelope or returned by post or by hand (and, if by hand, during normal business hours only) to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible and, in any event, so as to be received by no later than 11.00 a.m. on 10 February 2014. If you do not wish to apply for any Open Offer Shares under the Open Offer, you should not complete or return the Application Form.

12.2 Open Offer

Qualifying CREST Shareholders

If you are a Qualifying CREST Shareholder no Application Form will be sent to you and you will receive a credit to your appropriate stock account in CREST in respect of the Open Offer Entitlements under the Open Offer and also an Excess CREST Open Offer Entitlements for use in connection with the Excess Application Facility. You should refer to the procedure for application set out in Appendix 2 of this document.

The latest time for applications under the Open Offer to be received whether from Qualifying Non-CREST Shareholders or from Qualifying CREST Shareholders is 11.00 a.m. on 10 February 2014. The procedure for application and payment depends on whether, at the time at which the application and payment is made, you have an Application Form in respect of your entitlement under the Open Offer or have your Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to your stock account in CREST in respect of such entitlements. The procedures for application and payment are set out in Appendix 2 of this document. Further details also appear in the Application Form which has been sent to Qualifying Non-CREST Shareholders.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

The attention of Overseas Shareholders is drawn to paragraph 6 of Appendix 2 of this document.

If you are in any doubt as to the action you should take, you should immediately seek your own personal financial advice from an independent professional adviser authorised under the FSMA, if you are in the United Kingdom or, if you are not, from another appropriately authorised independent professional adviser.

12.3 Offer for Subscription

The terms and conditions of application under the Offer for Subscription are set out in Appendix 4 of this document and, where applicable, the Subscription Form. These terms and conditions should be read carefully before an application is made. The Subscription Form is contained in Appendix 4 of this document and will be available on the Company's website.

The latest time for applications under the Offer for Subscription is 11.00 a.m. on 10 February 2014.

If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under FSMA immediately if you are in the United Kingdom or, if you are not, from another appropriately authorised independent professional adviser.

13. FURTHER INFORMATION AND RISK FACTORS

Your attention is drawn to the further information set out in Parts II to X of this document. In addition, your attention is drawn to the section entitled "Risk Factors" at the front of this document after the section entitled "Summary". You are advised to read the whole of this document, and the documents incorporated by reference, and not to rely solely on the information contained in this letter.

14. DIRECTORS' INTERESTS

The Directors are not participating in the Capital Raising. Further information on their interests can be found in paragraph 10.4 of Part VII of this document.

15. RECOMMENDATION

The Board considers the Capital Raising and the passing of each of the Resolutions to be in the best interests of the Company and the Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of each of the Resolutions to be put to the General Meeting as they intend to do, or procure, in respect of their own beneficial holdings, amounting in aggregate to 4,253,681 Existing Shares, representing approximately 1.1 per cent. of the Existing Shares.

Yours sincerely

Dr Bruce Smith CBE Chairman

PART II

INFORMATION ON IP GROUP

1. INTRODUCTION

• 1.1 IP Group was established in 2000 to commercialise scientific innovation developed in the UK's leading research institutions.
• 1.2 IP Group's business model is to form, or assist in the formation of, spin-out companies based on that innovation, to take a significant minority equity stake in those spin-out companies and then to grow the value of that equity over time by taking an active role in the development of such spin-out companies. IP Group's strategy has been to build significant minority equity stakes across a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term.

An important aspect of the IP Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long term partnerships with a number of leading research universities in the UK. IP Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000 and now has direct contractual arrangements with 11 of the UK's leading universities including, most recently, its entry into of an IP commercialisation agreement with the University of Manchester in February 2013.

In addition, in the last quarter of 2009, IP Group both acquired a strategic stake in Fusion IP and entered into a co-investment agreement with Fusion IP relating to spin-out companies originating from Fusion IP's university partners, giving IP Group partial access to the scientific innovation from these leading research universities.

Further in January 2011, IP Group broadened its relationship with the University of Oxford by acquiring a stake in, and forming a commercialisation alliance with, Technikos, a venture capital fund specialising in early-stage medical technology with a long term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering.

More recently, IP Group completed a £5.0 million strategic investment in Cambridge Innovation Capital plc in October 2013. Cambridge Innovation Capital has raised £50.0 million to support the growth of innovative businesses located in the "Cambridge Cluster" and will be supported by the University of Cambridge's commercialisation office, Cambridge Enterprise. IP Group and Cambridge Innovation Capital have also entered into a memorandum of understanding to share information on investment and co-investment opportunities in the Cambridge Cluster and, where practicable, alongside other co-investors, to provide each other with access to such co-investment opportunities.

IP Group also has informal arrangements with other universities in the UK and it leverages the capabilities of its in-house sourcing team to identify and pursue compelling standalone opportunities arising from such universities.

In December 2013, IP Group announced that it had expanded its access to intellectual property beyond the UK to the East Coast of the United States by its entry into of IP commercialisation agreements with Columbia Technology Ventures, the technology transfer office of Columbia University and The University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme (UPstart).

• 1.3 As at 31 December 2013, IP Group had a portfolio of 72 companies in which its combined stake was valued at approximately £286 million1. Up to this date, IP Group had invested approximately £122 million in aggregate in its portfolio and had made cash realisations of approximately £42 million. The fair value of the Group's holdings in portfolio companies at, and cash realisations to, 31 December 2013 represents approximately 2.7 times the total cash invested by the Group into its portfolio companies since 2001. Approximately 79 per cent. of the value in the IP Group's portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. As at 31 December 2013, the aggregate value of companies in which IP Group has an investment exceeded £1.7 billion2.
• 1.4 In addition, IP Group has a FCA regulated venture capital fund management subsidiary, Top Technology Ventures, which specialises in providing equity funding for early stage technology based growth companies and currently manages three funds, the £31 million IP Venture Fund, the £25 million North East Technology Fund and the £30 million IP Venture Fund II.

2. BACKGROUND TO IP GROUP

• 2.1 In December 2000, Evolution Beeson Gregory (then known as Beeson Gregory Limited) entered into the University of Oxford Partnership (the first of its kind) and formed a separate company to manage this venture. In August 2001, Beeson Gregory Group plc (subsequently acquired by Evolution in July 2002) made the decision to transfer this company to a separate holding company, IP Group.
• 2.2 IP Group was quoted on AIM in October 2003 and subsequently moved to the Official List in June 2006. Subsequent to its admission to AIM, IP Group has raised approximately £83 million of net proceeds from equity investors which has enabled it to invest in and develop its portfolio of spin out companies.
• 2.3 As at 31 December 2013 IP Group had equity holdings in a portfolio of 72 companies. This portfolio falls broadly into the following three categories:
• 2.3.1 Pre-seed: these comprise businesses or pre-incorporation projects that are generally at a very early stage of development. Opportunities at this stage usually involve investments of less than £150,000 from IP Group, predominantly allowing for proof of concept work to be carried out. Incubation projects generally have a duration of nine to eighteen months, following which the opportunity is progressed to seed financing, terminated or retained at the pre-seed stage for a further period to allow additional proof of concept work to be carried out;
• 2.3.2 Seed: these comprise businesses which have typically received financing of up to £1.0 million in total, primarily from IP Group, in order to continue to progress towards agreed commercial and technology milestones and to enable the recruitment of management teams and early commercial engagement; and
• 2.3.3 Post-seed: these comprise businesses which have received some level of further funding from co-investors external to IP Group, with total funding received generally in excess of £1.0 million. Although each business can vary significantly in its rate and manner of development, such additional funding is generally used to progress towards key milestones and commercial validation, to build senior level capability in the business and to attract experienced nonexecutive directors to their boards. This category is further broken down into post-seed private and post seed quoted companies. Post-seed quoted companies consist of companies quoted on either AIM or the ISDX markets.

¹ Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited consolidated management accounts of the Company for the year ended 31 December 2013.

² Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited consolidated management accounts of the Company for the year ended 31 December 2013 and grossed up to reflect the overall value of such portfolio companies.

• 2.4 As at 31 December 2013, the Group's portfolio of 72 companies consisted of 8 pre-seed businesses, 20 seed businesses and 44 post-seed businesses of which 18 were quoted. The Group's holdings in pre-seed and seed businesses were valued at approximately £12 million (in aggregate) at 31 December 2013 and its holdings in post-seed businesses at approximately £274 million (in aggregate)1. Of the 44 post seed businesses, the top ten by value represented approximately 79 per cent. of the Group's overall portfolio value. Further details on these ten companies, including a description of their businesses, amounts invested and realised by IP Group during the year to 31 December 2013 and the values of the IP Group's holdings as at 31 December 2013, is set out in paragraph 22 of this Part II.
• 2.5 IP Group's portfolio is diverse with exposure to five main sectors Energy & Renewables, Medical Equipment & Supplies, Pharma & Biotech, Chemicals & Materials and IT & Communications.
• 2.6 The experienced Board currently comprises a Non-executive Chairman, Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, Managing Directors, Top Technology Venture and three additional Non-executive Directors. The Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of technologybased businesses.
• 2.7 The Board is supported by an experienced management team, including a highly qualified team specialising in the life and physical sciences sectors that has primary responsibility for sourcing, evaluating and building new and early stage opportunities (comprising pre-seed and seed). In addition, IP Group leverages its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of the IP Group's spin-out companies.
• 2.8 As at 31 December 2013 IP Group employed 38 staff (including the executive Directors) and operated principally from offices at 24 Cornhill, London EC3V 3ND, with smaller regional offices in Oxford, Leeds and Newcastle.

3. PARTNERSHIPS AND OTHER COLLABORATIVE ARRANGEMENTS

• 3.1 IP Group's core business is the creation of value for its shareholders and partners through the commercialisation of IP, and the provision of capital and expertise to, spin-out companies originating from universities and other research intensive institutions.
• 3.2 Through its Partnerships, IP Group seeks to:
• 3.2.1 through its Long Term Partnerships, be a party to long-term arrangements with universities under which IP Group has access to potentially world class IP and may receive a significant minority interest in spin-out companies formed on the basis of, and/or income derived from the licensing of, such IP;
• 3.2.2 through its Other Partnerships and Collaborations, gain access to potentially world class IP from additional universities and research intensive institutions, both in the UK and on the East Coast of the US, and to commercialisation and investment opportunities in spin-out companies based on such IP;
• 3.2.3 work with the universities and research institutions concerned to develop and improve the processes by which they seek to commercialise the IP that they generate through spin-out companies;
• 3.2.4 work closely with spin-out companies from those universities and research institutions in which IP Group has an interest with a view to improving their prospects of success through operational, commercial, technical and strategic guidance; and
• 3.2.5 realise value from its portfolio of spin-out companies through the creation of exit opportunities by way of trade sales and initial public offerings or the creation of profitable businesses paying dividends to shareholders (including IP Group).

¹ Calculated by reference to the values attributed to the Group's investments in the unaudited consolidated management accounts of the Company for the year ended 31 December 2013.

3.3 IP Group has entered into Long Term Partnerships with eleven universities in the UK. Through its Other Partnerships and Collaborations, IP Group currently has access to the IP created at an additional five universities in the UK, as well as an additional department at the University of Oxford and two universities in the US. A description of each of the Partnerships together with the arrangements with Cambridge Innovation Capital plc, including the ways in which IP Group generates income for itself and its partners and other collaborators through the commercialisation of the IP generated by such universities and arrangements through spin-out companies, is set out below and in paragraph 15 of Part VII.

4. UNIVERSITY OF OXFORD PARTNERSHIP

• 4.1 Under the terms of the University of Oxford Partnership, IP2IPO Limited is entitled to:
• 4.1.1 50 per cent. of the University of Oxford's share in the equity of spin-out companies based around IP created at the University of Oxford's Chemistry Department (after the allocation of shares in the spin-out company to its academic founders). This entitlement applies to all such spin-out companies formed during the period between the commencement of the University of Oxford Partnership (December 2000) and November 2015 (or termination of the Partnership, if earlier). However, IP Group's entitlement to such 50 per cent. of the University of Oxford's share in the equity of spin-out companies is pro-rated downwards by the number of the academic founders who are not in the Chemistry Department (e.g. if a spin-out company was founded by two academics, one of whom was not in the University of Oxford's Chemistry Department, IP Group's entitlement reduces to 25 per cent.); and
• 4.1.2 50 per cent. of the University of Oxford's share of the income derived from the licensing of IP arising out of the University of Oxford's Chemistry Department (after the allocation of income to its academic founders). This entitlement applies to all licensing agreements entered into during the term of the University of Oxford Partnership.
• 4.2 In January 2011, IP Group broadened its relationship with the University of Oxford through the acquisition of a strategic stake in Technikos, a venture capital fund specialising in early-stage medical technology which has a long-term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering ("IBME"). IP Group now provides access to its commercialisation, capital markets and scientific expertise and works alongside the Technikos team to assist with the creation of new spin-outs based on science generated by the IBME. For further details of IP Group's arrangements with Technikos, please see paragraph 16 below.
• 4.3 Please refer to the paragraph 15.1 of Part VII for further information.

5. UNIVERSITY OF SOUTHAMPTON PARTNERSHIP

• 5.1 Under the terms of the University of Southampton Partnership, IP2IPO Limited committed, subject to the quality and quantity of the potential investment opportunities, to make available to its subsidiary, IP2IPO Management Limited, the £5m Southampton Fund for investment in spin-out companies based on IP created at the University of Southampton. As at the date of this document, the contractual commitment and the basis for investment in the £5m Southampton Fund is under review by IP Group and the University of Southampton.
• 5.2 The terms of the University of Southampton Partnership provide that IP Group is entitled to:
• 5.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Southampton as a result of investments made by IP2IPO Management Limited out of the £5m Southampton Fund; and
• 5.2.2 an indirect interest in such spin-out companies by virtue of IP2IPO Limited's 20 per cent. shareholding in Southampton Asset Management Limited. Southampton Asset Management Limited is a company that has been set up to own the University of Southampton's equity interests in spin-out companies (after the allocation of shares in the spin-out company to its

academic founders) acquired during the term of the University of Southampton Partnership. The remaining 80 per cent. of Southampton Asset Management Limited is owned by the University of Southampton.

• 5.3 In accordance with the terms of the University of Southampton Partnership, IP2IPO Limited holds all of its indirect interests in the University of Southampton spin-out companies on its own balance sheet. In practice, IP Group and the University of Southampton have agreed that, rather than holding its 'indirect interest' entitlement through Southampton Asset Management Limited (as described above), IP Group holds this directly through IP2IPO Management Limited.
• 5.4 The University of Southampton Partnership commenced in March 2002 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances.
• 5.5 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £3.6 million of the £5 million Southampton Fund had been invested or committed.
• 5.6 Please refer to paragraph 15.2 of Part VII for further information.

6. KING'S COLLEGE LONDON PARTNERSHIP

• 6.1 Under the terms of the original Long Term Partnership with King's College London entered into in 2003, IP2IPO Limited committed to make available to its subsidiary, IP2IPO Management II Limited, the £5 million King's College Fund for seed capital investment in spin-out companies based on IP created at King's College London.
• 6.2 The terms of the partnership with King's College London Partnership were revised in 2009 and under the revised agreement IP Group has agreed to target investing the remaining £3.2 million of the £5m King's Fund over a three year period which commenced on 12 November 2009. This target is dependent on the quality and quantity of the investment opportunities that come through the Partnership. KCL cannot, however, require IP Group to make any additional funds available to the extent that this amount is fully invested.
• 6.3 The terms of the King's College London Partnership provide that IP Group is entitled to a direct equity shareholding in spin-out companies based on IP created at King's College London as a result of investments made out of the £5 million King's Fund.
• 6.4 The King's College London Partnership commenced in November 2009 and will terminate on 14 May 2028, subject to earlier termination in certain limited circumstances.
• 6.5 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £1.8 million of the £5 million King's Fund had been invested.
• 6.6 Please refer to paragraph 15.3 of Part VII for further information.

7. CENTRE FOR NOVEL AGRICULTURAL PRODUCTS ("CNAP") PARTNERSHIP

• 7.1 Pursuant to the terms of the CNAP Partnership entered into in 2003, IP2IPO Limited has invested £1.15 million in Amaethon Limited, a technology commercialisation company formed to commercialise CNAP's IP. Initially, the University of York owns CNAP's IP, but Amaethon Limited has the right to manage this IP and to call for its transfer to CNAP or its nominee.
• 7.2 The terms of the CNAP Partnership provide that IP Group:
• 7.2.1 is entitled to a direct equity shareholding in spin-out companies based on CNAP's IP acquired as a result of IP2IPO Limited's investment; and

• 7.2.2 was originally entitled a 40 per cent. interest in Amaethon Limited (which in turn owns the University of York's interest in spin-out companies and licences based on CNAP's IP), with the balance being owned by the University of York.

• 7.3 IP2IPO Limited has committed, subject to the quality and quantity of the potential investment opportunities, to invest up to a total of £750,000 over three years, commencing in September 2003, in spin out companies based on CNAP's IP and this amount may be extended at IP2IPO Limited's option.

• 7.4 As at 24 January 2014, being the last practicable date prior to publication of this document, approximately £0.2 million had been invested under the CNAP Partnership.
• 7.5 Please refer to paragraph 15.4 of Part VII for further information.

8. UNIVERSITY OF YORK PARTNERSHIP

• 8.1 IP Group entered into a wider partnership to cover the entire University of York in March 2006 and which was varied in March 2009. IP2IPO Limited committed to invest the £5m York Fund in spin out companies based on IP created at the University of York (excluding the CNAP Partnership). IP Group's investments in spin-out companies from the £5 million York Fund will be directly owned by IP2IPO Limited. The University of York Partnership provides that the £5 million York Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a 7 year period commencing in March 2006.
• 8.2 The terms of the University of York Partnership (as varied) provide that IP Group is entitled to:
• 8.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of York as a result of investments made out of the £5 million York Fund; and
• 8.2.2 an "automatic" interest in the University of York's spin-out companies by virtue of IP Group's entitlement to a 25 per cent. shareholding in any spin-out company formed from the University of York whilst the Partnership continues (prior to any investment from the £5 million York Fund) in the event that IP Group proposes, and the University of York agrees, that the commercialisation opportunity is progressed and the Fund invests in the spin-out company and a 5 per cent. shareholding in the spin-out company in certain other circumstances in the event that the Fund does not invest.
• 8.3 The University of York Partnership commenced in March 2006 and has a term of 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5 million York Fund. In the event that IP2IPO Limited does not extend the £5m York Fund, the Partnership will terminate.
• 8.4 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £0.1 million had been invested from the £5 million York Fund.
• 8.5 Please refer to paragraph 15.8 of Part VII for further information.

9. UNIVERSITY OF LEEDS PARTNERSHIP

• 9.1 Under the terms of the original partnership with the University of Leeds entered into on 15 July 2005 (the "Original Agreement"), the Company committed to invest the £5 million Leeds Fund in spin-out companies based on IP created at the University of Leeds. The Original Agreement provided that the £5 million Leeds Fund would, subject to the quantity and quality of investment opportunities, be invested over a period of 5 years commencing on 15 July 2005. The entire £5 million Leeds Fund has now been invested.
• 9.2 Pursuant to a variation agreement dated 17 March 2011 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.
• 9.3 Under the Variation Agreement, the Company has agreed that, it will work with the University of Leeds to, subject to the quality and quantity of the investment opportunities, seek to attain the following investment targets: (i) a base-line of grub fund investments of £200,000 per annum in

aggregate; and (ii) a base-line of seed fund investments of £500,000 per annum in aggregate. The parties intend that such targets will be the subject of ongoing review.

• 9.4 The terms of the University of Leeds Partnership provide that IP Group is entitled to:
• 9.4.1 a direct equity shareholding in spin-out companies based on IP created at the University of Leeds as a result of seed fund investments made by the Company;
• 9.4.2 subject to certain exceptions) an "automatic" interest, amounting to a 30 per cent. shareholding, in any spin-out company formed from the University of Leeds whilst the Partnership continues (prior to any investment by IP Group); and
• 9.4.3 30 per cent. of the net revenues received by the University of Leeds in respect of out-licensing in certain limited circumstances (i.e. where such licensing opportunity is managed by IP Group and either (i) the opportunity results from the conversion of an IP Group incubated company or (ii) IP Group has otherwise had significant input (including finding the potential licensee and negotiating the commercial heads of terms with such licensee) in relation to such opportunity).
• 9.5 The University of Leeds Partnership shall continue until midnight on 19 December 2027. However, either party may terminate the University of Leeds Partnership on 17 March 2014 (the "Break Date") by serving twelve months' notice in writing on the other parties at any time within the period of 30 days prior to the Break Date. If no such notice of termination is served, the next formal review of the University of Leeds Partnership shall occur on 30 April 2017.
• 9.6 Please refer to paragraph 15.5 of Part VII for further information.

10. UNIVERSITY OF BRISTOL PARTNERSHIP

• 10.1 Under the terms of the University of Bristol Partnership, IP2IPO Limited committed to provide expertise and assistance to the University of Bristol in respect of its technology transfer activities. IP2IPO Limited committed to invest the £5 million Bristol Fund in spin-out companies based on IP created at the University of Bristol. The University of Bristol Partnership provides that the £5 million Bristol Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a period of 5 years commencing in December 2005.
• 10.2 The terms of the University of Bristol Partnership provide that IP Group is entitled to:
• 10.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Bristol as a result of investments made out of the £5 million Bristol Fund; and
• 10.2.2 an "automatic" interest in the University of Bristol's spin-out companies by virtue of IP Group's entitlement to a 13.3 per cent. shareholding in any spin-out company formed from the University of Bristol whilst the Partnership continues.
• 10.3 The University of Bristol Partnership commenced in December 2005 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5 million Bristol Fund.
• 10.4 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £1.0 million of the £5 million Bristol Fund had been invested.
• 10.5 Please refer to paragraph 15.6 of Part VII for further information.

11. UNIVERSITY OF SURREY PARTNERSHIP

11.1 Under the terms of the University of Surrey Partnership, IP2IPO Limited committed to provide expertise and assistance to the University of Surrey in respect of its technology transfer activities. IP2IPO Limited committed to invest the £5m Surrey Fund in spin-out companies based on IP created at the University of Surrey. The University of Surrey Partnership provides that the Surrey Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a period of 7 years commencing in February 2006.

• 11.2 The terms of the University of Surrey Partnership provide that IP Group is entitled to:
• 11.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Surrey as a result of investments made out of the £5m Surrey Fund; and
• 11.2.2 an "automatic" interest in the University of Surrey's spin-out companies by virtue of IP Group's entitlement to a 13.3 per cent. shareholding in any spin-out company formed from the University of Surrey whilst the Partnership continues.
• 11.3 The University of Surrey Partnership commenced in February 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5m Surrey Fund.
• 11.4 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £0.5 million of the £5 million Surrey Fund has been invested.
• 11.5 Please refer to paragraph 15.7 of Part VII for further information.

12. UNIVERSITY OF BATH PARTNERSHIP

• 12.1 Under the terms of the University of Bath Partnership, IP2IPO Limited committed to provide expertise and assistance to the University of Bath with a view to creating value from the IP of the University of Bath. IP2IPO Limited committed to invest the £5 million Bath Fund in spin out companies based on IP created at the University of Bath. The University of Bath Partnership provides that the £5 million Bath Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a period of 7 years commencing in September 2006.
• 12.2 The terms of the University of Bath Partnership (as amended in 2010) provide that IP Group is entitled to:
• 12.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Bath as a result of investments made out of the £5 million Bath Fund; and
• 12.2.2 an interest amounting to the greater of: (i) 20 per cent. of the shareholding of the University of Bath in any spin-out company; and (ii) 10 per cent. of the initial equity in that spin-out company or joint venture spin-out (prior to any investment from the £5 million Bath Fund) formed under the Partnership in circumstances where IP Group has been actively engaged on the opportunity;
• 12.2.3 in the event that the University of Bath, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company, then IP2IPO Limited is entitled to 20 per cent. of the shareholding to which the University of Bath is entitled in circumstances where IP Group has been actively engaged on the opportunity (and 10 per cent. of the shareholding where it has not been actively engaged); and
• 12.2.4 an interest in licence fees generated by the University of Bath from its IP not commercialised through spin-out companies.
• 12.3 The University of Bath Partnership commenced in September 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5 million Bath Fund.
• 12.4 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £0.2 million of the £5 million Bath Fund has been invested.
• 12.5 Please refer to paragraph 15.10 of Part VII for further information.

13. UNIVERSITY OF GLASGOW PARTNERSHIP

• 13.1 Under the terms of the University of Glasgow Partnership, IP2IPO Limited committed to identifying and progressing spin-out company opportunities within the University of Glasgow with a view to creating value from the IP of the University of Glasgow. IP2IPO Limited committed to invest the £5 million Glasgow Fund in spin-out companies based on IP created at the University of Glasgow. The University of Glasgow Partnership provides that the Glasgow Fund will, subject to the quantity and quality of the potential investment opportunities, be invested over a period of 5 years commencing in October 2006.
• 13.2 The terms of the University of Glasgow Partnership provide that IP Group is entitled to:
• 13.2.1 an "automatic" interest, amounting to a 12 per cent. shareholding, in each spin-out company or joint venture spin-out based on IP created by the University of Glasgow formed during the term of the Partnership (prior to any investment from the £5 million Glasgow Fund); and
• 13.2.2 in the event that the University of Glasgow, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company, then IP2IPO Limited is entitled to 10 per cent. of the revenue received by the University of Glasgow as a result of the disposal of its shareholding in such company.
• 13.3 The University of Glasgow Partnership commenced in October 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5 million Glasgow Fund.
• 13.4 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £1.2 million of the £5 million Glasgow Fund had been invested.
• 13.5 Please refer to the paragraph 15.11 of Part VII for further information.

14. QUEEN MARY PARTNERSHIP

• 14.1 Under the terms of the Queen Mary Partnership (the "Original Agreement"), IP2IPO Limited is committed to taking an active role in identifying and progressing such commercialisation opportunities as are envisaged by QMUL, with a view to creating value from IP created by QMUL.
• 14.2 IP2IPO Limited committed to invest the initial amount of £3 million in spin-out companies based on IP created at QMUL. The Queen Mary Partnership provides that the initial amount of £3 million will, subject to the quantity and quality of the potential investment opportunities, be invested over a period of 7 years commencing in October 2006, and will be increased to £5 million upon full investment of the £3 million or earlier at the discretion of IP2IPO Limited.
• 14.3 The terms of the Queen Mary Partnership initially provide that IP Group is entitled to:
• 14.3.1 10 per cent. of all licence fees, after deducting all patent costs incurred by the University of London in relation to the relevant IP;
• 14.3.2 an "automatic" interest, amounting to a 13.3 per cent. shareholding, in each spin-out company formed during the term of the Partnership (prior to any investment from the £5m QMUL Fund) which is replaced, pursuant to the terms and conditions of the Variation Agreement (such as set out above), with a warrant over an equivalent amount of shares exercisable at seed; and
• 14.3.3 in the event that QMUL, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company in return for equity, then IP2IPO Limited is entitled to 10 per cent. of each class of equity (or capital) to which QMUL.

• 14.4 Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.

• 14.5 Under the Variation Agreement, it has been agreed (i) that the Company's obligation of providing a full time employee, to QMLU (such as this term is defined in the Original Agreement), is removed and replaced with an IP2IPO Representative and (ii) suggests a revised and constructive way in which the IP2IPO Representative (and members of IP2IPO's client sourcing team) will work with Queen Mary Innovation Limited ("QMI") on the ground to identify commercialisation opportunities. Furthermore, the parties agreed that IP2IPO's right to a share of licensing fees (as referred to in paragraph 14.3.3 above) shall be removed save where (a) there is the conversion of an IP2IPO incubated company into an Out-Licensing opportunity, (b) IP2IPO establish a company as a licensing vehicle for platform technology, and/or (c) IP2IPO has otherwise had significant input in respect of the relevant Out Licensing opportunity (which would include both finding the potential licensee and undertaking negotiation of the commercial head of terms with such party). In addition, pursuant to the Variation Agreement IP2IPO initial founder equity right (as described in paragraph 14.3.2 above) has been removed and replaced with a warrant over an equivalent amount of shares in the relevant spin-out company exercisable at the seed investment stage, save in situations whereby IP2IPO shall have expended efforts at an early stage to work up the relevant commercialisation opportunity to the stage where it is presented to the investment committee of IP2IPO but that the relevant opportunity is declined for investment from IP2IPO and as a consequence the relevant spin-out company goes onto raise money form a third party and or achieve an Exit Event (as defined in the relevant warrant instrument), then QMUL shall, until such time as an Exit Event is achieved, hold such number of equity shares in the relevant spin-out company as is equal to the proportion of initial equity that IPI2IPO would have been entitled under the Original Agreement, being 13.3 per cent. of the initial equity, on bare trust for IP2IPO. The parties also agreed on more regular reviews of their agreement.

• 14.6 The Queen Mary Partnership commenced in July 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO Limited has the right, but not the obligation, to extend the £5m QMUL Fund.
• 14.7 As at 24 January 2014, being the latest practicable date prior to publication of this document, approximately £0.7 million of the £5m QMUL Fund had been invested.
• 14.8 Please refer to paragraph 15.9 of Part VII for further information.

15. ARRANGEMENTS WITH FUSION IP

• 15.1 In November 2009, IP Group acquired approximately 19.8 per cent. of the issued share capital of Fusion IP and, concurrent with this acquisition, entered into a co-investment agreement with Fusion IP, which owns the exclusive commercialisation rights to 100 per cent. of the IP created at each of the University of Sheffield and Cardiff University.
• 15.2 The terms of the co-investment agreement provide that IP Group is entitled to purchase 20 per cent. of Fusion IP's shareholding in any spin-out company based on IP created by the University of Sheffield or Cardiff University. The consideration for the acquisition of such interest is the payment by IP Group of a sum calculated by reference to a pre-agreed valuation of such spin-out company.
• 15.3 As Fusion IP normally owns 60 per cent. of any new spin-out company upon its incorporation (following allocation to founder academics), IP Group's shareholding will normally equate to a 12 per cent. interest in the new spin-out company if it exercises its right to purchase under the co-investment agreement. The co-investment agreement further provides that should IP Group choose to exercise such right, it will also invest a minimum of 20 per cent. of the initial seed capital provided to each spin-out company.
• 15.4 The co-investment agreement will continue until the termination or expiry of the agreements which Fusion IP has with the University of Sheffield and Cardiff University. Fusion IP's agreement with Cardiff University is due to expire on 9 January 2017 and its agreement with the University of Sheffield is due to expire on 1 August 2018.
• 15.5 In March 2013, Fusion IP entered into Memorandum of Understanding agreements with two additional universities, the University of Nottingham and Swansea University, which allow for coinvestment by the Group, in line with the terms of the Group's existing co-investment agreement with Fusion IP.

15.6 Please refer to paragraphs 15.19(b), 16.3 and 16.4 of Part VII for further information.

16. ARRANGEMENTS WITH TECHNIKOS

• 16.1 On 13 January 2011, IP Group acquired a strategic stake in Technikos. Technikos is a specialist medical technology fund with a long term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering ("IBME").
• 16.2 IP Group will assist Technikos to spin out companies from the IBME. In addition, IP Group will provide the Technikos team with access to its commercialisation, capital markets and scientific expertise.
• 16.3 To date, Technikos has spun out eight companies from the IBME, including Eykona Limited and OrganOx Limited.
• 16.4 Under the terms of its agreement with the University of Oxford (the "IBME Agreement"), Technikos has the right to acquire 50 per cent. of the issued or to be issued share capital held by the University of Oxford in spin-out companies based on IP created at the IBME 50 per cent. of the University of Oxford's revenue from licences of IP created at the IBME save that, in each case, the percentage share entitlement will be reduced to the extent that all the founder academics to which the relevant IP relates are not based in the IBME.
• 16.5 The IBME Agreement commenced in June 2006 and shall continue until the date falling 15 years from the date on which the fit-out works on the IBME are completed, subject to earlier termination in certain limited circumstances. At the commencement of the fourteenth year following completion of the fit-out works, the parties will discuss and agree whether or not to extend the term of the agreement for an additional period of three years.
• 16.6 Please refer to paragraph 15.13.5 of Part VII for further information.

17. UNIVERSITY OF MANCHESTER IP COMMERCIALISATION AGREEMENT

• 17.1 Under the terms of the Manchester IP commercialisation agreement, the Group has created a Proof of Principle ("PoP") funding facility for the identification and formation of new spin-out companies. The Group has agreed to make available an initial facility of up to £5 million to provide capital to new proof of principle projects intended for commercialisation through spin-out companies.
• 17.2 The terms of the commercialisation agreement provide that IP Group is entitled to:

17.2.1 receive equity stakes in such spin-out companies on pre-agreed terms; and

17.2.2 invest further in these companies as they progress.

• 17.3 The Group will provide access to its relevant experts, business building expertise, mentoring, coaching and co-investing networks, recruitment and business support.
• 17.4 The agreement, which is a for a minimum term of four years, or five years subject to certain conditions, covers the majority of the areas of materials and clean technology, electronics and communications and all non-therapeutic life, medical and human sciences and information technology.
• 17.5 Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the original Manchester IP commercialisation agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.
• 17.6 Under the Variation Agreement, it has been agreed to widen the scope of the original POP fund agreement and more particularly the technology areas to include graphene and other 2-D materials. Furthermore, the parties agreed that, given this increase in the scope of the original POP fund

agreement, IP2IPO shall attempt to seek to increase its aggregate funding commitment under the original POP funding agreement from £5 million to up to £7.5 million within an agreed time period.

17.7 Please refer to paragraph 15.14 of Part VII for further information.

18. SUMMARY OF ARRANGEMENTS WITH CAMBRIDGE INNOVATION CAPITAL

• 18.1 Pursuant to a subscription agreement dated 9 October 2013, the Group has completed an investment of £5 million in Cambridge Innovation Capital plc, in return for which the Group has acquired an 8 per cent. stake.
• 18.2 In addition, the Group and Cambridge Innovation Capital have entered into a Memorandum of Understanding to share information on investment and co-investment opportunities in the "Cambridge Cluster" and, where practicable and alongside other co-investors, to provide each other with access to such co-investment opportunities.
• 18.3 Please refer to paragraph 15.16 of Part VII for further information.

19. COMMERCIALISATION AGREEMENT WITH COLOMBIA UNIVERSITY

Pursuant to a collaboration agreement dated 24 October 2013 and made between the Group and the Trustees of Columbia University in the City of New York, on behalf of Columbia Technology Ventures, the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with the commercialisation of early-stage, proof of principle opportunities based on intellectual property developed at Columbia University and geared towards the formation of spin-out companies. Broadly summarised, these arrangements entitle the Group, at its sole discretion and determination, to fund proof of principle opportunities up to an aggregate level of \$500,000 over a period of 18 months from the date of the agreement.

Please refer to paragraph 15.17 of Part VII for further information.

20. COMMERCIALISATION AGREEMENT WITH UNIVERSITY OF PENNSYLVANIA

Pursuant to the terms of a collaboration agreement entered into between the Group and The Trustees of the University of Pennsylvania, the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with early-stage, proof of principle opportunities for the Group to invest in technologies and companies based on Penn IP trough Upstart (the UPstart company formation program of Penn's Centre for Technology Transfer). Broadly summarised, these arrangements entitle the Group, at its sole discretion and determination, to fund proof of principle opportunities up to an aggregate level of \$500,000 over a period of 18 months from the date of the agreement.

Please refer to paragraph 15.18 of Part VII for further information.

21. OTHER UNIVERSITY PARTNERSHIPS

IP Group will continue to assess further opportunities, and to enter into partnerships or other collaborative arrangements with leading research universities, on a selective basis where it identifies institutions which the Directors believe have sufficient breadth and depth of research and the right innovative culture to build a diversified portfolio of high growth spin-out companies over the lifetime of the partnership or other collaborative arrangement.

22. CURRENT PORTFOLIO

22.1 As at 31 December 2013, IP Group's portfolio of 72 companies consisted of 8 pre-seed businesses, 20 seed businesses and 44 post-seed businesses of which 18 were quoted. Of the 44 post-seed businesses, the top ten by value represented approximately 79 per cent. of IP Group's overall portfolio value.

22.2 The following table sets out IP Group's equity interests in its top ten post-seed businesses by value as at 31 December 2013. The information below is extracted from IP Group's unaudited management accounts for the financial year ended 31 December 2013.

					Year to 31 December 2013
		Group Stake at 2013	Fair value of Group holding at 31 December 31 December 2012	––––––––––––––––––– Net investment/ (divestment)	movement	Fair value of Group holding at Fair value 31 December 2013
Company name	Description	%	£m	£m	£m	£m
Oxford Nanopore Technologies Limited	Single molecule detection. 1st application in 3rd generation DNA sequencing ("\$1000 genome")	19.6	66.5	4.5	33.3	104.3
Retroscreen Virology Group plc	Viral challenge and 'virometrics' specialist ("conquering viral disease")	18.3	12.4	1.1	16.1	29.6
Tissue Regenix Group plc	Regenerative dCELL® soft tissue body parts	13.8	11.3	–	9.4	20.7
Applied Graphene Materials plc	Producer of specialty graphene materials	20.4	0.7	2.0	12.2	14.9
Fusion IP plc	University intellectual property commercialisations	20.1	10.0	1.7	2.8	14.5
Avacta Group plc	Reagents, arrays and instruments for human and animal healthcare	27.6	9.9	0.9	1.4	12.2
Ceres Power Holdings plc	Ceramic fuel cell technology for distributed generation	24.7	6.2	2.0	2.1	10.3
Modern Water plc	Technologies to address the world's water crisis	20.0	6.7	1.7	(1.6)	6.8
Getech Group plc	Gravitational and magnetic data services for the oil, gas and mining industries	23.4	3.1	–	3.3	6.4
Tracsis plc	Resource optimisation software for the transport industry	10.9	5.0	(0.6)	1.1	5.5

23. FUND MANAGEMENT BUSINESS

• 23.1 IP Group acquired Top Technology Ventures, an FCA–regulated venture capital fund management company which specialises in providing equity funding for early stage technology based growth companies, in June 2004. Top Technology Ventures was founded in 1986 and has earned a reputation for significant expertise in the early stage UK technology sector.
• 23.2 Top Technology Ventures currently manages:
• 23.2.1 IP Venture Fund, a £31 million venture capital fund which was established in July 2006 in partnership with the European Investment Fund. IP Venture Fund's primary investment objective is to provide up to 25 per cent. of the capital invested or to be invested in post-seed financing rounds of IP Group's portfolio companies;

• 23.2.2 The North East Technology Fund, a £25 million, ten year venture capital fund which was set up to invest in technology companies in the North East region of England from seed through to the growth stages of development (including opportunities from the leading research universities based in the region); and

• 23.2.3 IP Venture Fund II, a £30 million venture capital fund which was established in May 2013 in partnership with the European Investment Fund. IP Venture Fund Venture Fund II is a successor fund to IP Venture Fund and will invest alongside IP Group in new spin-out companies, from incubation stage through seed and post-seed stage, from IP Group's university partnerships and other collaborations, with an investment ratio of 30:70 (IP Venture Fund II: IP Group).

• 23.3 Top Technology Ventures is a member of the British Venture Capital Association and is authorised and regulated by the FCA.
• 23.4 The Directors believe that the management of third party funds brings a number of benefits to IP Group as specified in paragraph 2.4 of Part I of this document.
• 23.5 Top Technology Ventures also earns fees and commissions through providing corporate finance services to IP Group's portfolio companies.

24. THE COMPETITIVE ENVIRONMENT

• 24.1 IP Group's revenue and increases in net assets are principally derived from its core business of commercialising IP and providing capital and expertise to spin-out companies originating from universities and other research intensive institutions.
• 24.2 There are a number of companies and other organisations which are seeking to commercialise intellectual property and/or provide capital to spin-out companies arising from universities and other research institutions in the UK. These include ANGLE plc, Cambridge Innovations Capital plc, Frontier IP plc, Imperial Innovations Group plc, Imprimatur Capital, Invoke Capital, NetScientific plc, Parkwalk Advisors, Rock Spring Ventures and Spark Ventures. As a result of its Partnerships, IP Group has direct contractual arrangements with eleven universities in the UK and accordingly has preferred access to provide capital and expertise to spin-out companies arising from such universities. In addition, there are a number of companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies in other jurisdictions in which the Group may operate, including, for example, Allied Minds, Inc. in the United States.
• 24.3 However, where IP Group does not have preferred access to invest in the spin-out companies arising from a university or other research institutions through a direct contractual arrangement and that university, research institution, their technology transfer office and/or individual spin-out companies are prepared to work with a number of different person or entities, then IP Group will be competing with those other commercialisation organisations, regional development authorities, venture capital funds, certain institutional investors and angel investors to provide capital to the spin-out companies created by such university or research institution.
• 24.4 Further, the technology transfer offices of certain universities or research institutions may themselves seek to commercialise the IP that they generate which could reduce the number of commercialisation opportunities available to IP Group.
• 24.5 IP Group's portfolio companies may now, or in future, be competing with other technologies in the market. They also compete with other companies and organisations for funding, appropriately skilled personnel and industry attention (including, for example, interest from potential development partners, customers and potential acquirers or investors). Such competition is not limited to companies or organisations operating within the same industry sector as IP Group's portfolio companies and the portfolio companies may compete with early stage businesses in other sectors and markets.

• 24.6 IP Group may need additional capital in future for expansion activity and/or business development, whether from equity or debt sources. If there is a lack of funding in the market, then IP Group will be competing with other businesses to secure this funding. Competing businesses may also be looking to recruit highly qualified and experienced employees similar to those of IP Group, which may lead to competition to recruit and retain employees of the desired calibre.

• 24.7 The Directors believe that IP Group is in a strong competitive position relative to other companies and organisations that are seeking to provide commercialisation services to universities and other research institutions in the UK for the following reasons:

• 24.7.1 IP Group has secured access to a wide range of leading scientific innovation through its Long Term Partnerships and its Other Partnerships and Collaborations, which have resulted in it having arrangements covering fifteen of the UK's leading research universities;
• 24.7.2 IP Group also has good working relationships with a number of other universities and research intensive institutions;
• 24.7.3 the rigorous opportunity appraisal process developed by, and proprietary to, IP Group means that IP Group is well placed to assess early stage technology businesses with a view to identifying and developing the most promising opportunities;
• 24.7.4 the Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of IP-based businesses. The Board is supported by an experienced management team, including a highly qualified team specialising in the life and physical sciences sectors;
• 24.7.5 IP Group is able to leverage its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of its portfolio companies; and
• 24.7.6 IP Group has a strong cash position (as a result of the Capital Raising) and, in addition, the third party funds which IP Group manages broadens the sources of finance potentially available to its portfolio companies in circumstances where the investment is aligned with the relevant fund's investment mandate.

25. DIVIDEND POLICY

The Board's current intention is to retain IP Group's earnings in the foreseeable future to finance growth and expansion. It is, however, the Directors' intention to pay dividends when, in the view of the Directors, IP Group has sufficient cash for this purpose.

PART III

INFORMATION ON FUSION IP

1. INTRODUCTION

Fusion IP was established in 2002 to commercialise university-generated intellectual property and currently has agreements with four UK universities:

• the University of Sheffield;
• Cardiff University;
• the University of Nottingham; and
• Swansea University.

Fusion IP works in partnership with these Universities to identify the IP that they believe has the greatest commercial potential and then invests its money and resources in such inventions in order to generate value from this world-class research. This enables Fusion IP to invest in some of the world's most advanced science and turn world-class research into a commercial opportunity, either through the creation of a spinout company or a licence. Further details on these companies are set out in paragraph 2 below.

Since its establishment, Fusion IP has constructed a well-balanced portfolio of engineering, software and medical businesses and currently has shareholdings in over 20 companies, including significant shareholdings in Diurnal, Phase Focus, Magnomatics, Seren, MedaPhor, FCL and Asalus. Further details on these companies are set out in paragraph 4 below.

In 2012, Fusion IP announced its first major portfolio company exit, when it sold its portfolio company Simcyp, a research-based business providing a modelling and simulation platform for predicting the fate of drugs in virtual populations, to US based Certara LP for \$32 million, a 200-fold return on its original investment.

As described in paragraph 15 of Part II, in 2009, IP Group acquired a strategic stake in Fusion IP (by way of a £3.2 million share subscription) and also entered into a co-investment agreement with Fusion IP relating to spin-out companies originating from Fusion IP's university partners.

In the first quarter of 2013, Fusion IP raised an additional £20 million through a placing to existing and new institutional shareholders.

2. PARTNERSHIPS WITH UK UNIVERSITIES

Fusion IP's University agreements fall into two categories – exclusive IP agreements and Memorandum of Understanding (MOU) agreements:

Exclusive IP Agreements

Fusion IP owns the exclusive rights to 100 per cent. of the university-owned intellectual property generated at two of the UK's leading research intensive universities – the University of Sheffield and Cardiff University. Under these agreements Fusion IP works in close partnership with the University's in-house commercial team to identify IP with the most commercial potential and then works with the academic team to turn the original academic research into a fundable business plan. Fusion IP then invests cash and management resources to create a spin-out company, in which it owns a 60 per cent. equity shareholding of the start-up company shareholding on incorporation.

A short summary of each of the University agreements is set out below:

University of Sheffield

Sheffield is a member of the exclusive Russell Group of research led-universities and is ranked in the top 10 universities in the UK. It counts five Nobel laureates among its alumni and has a long tradition of scientific excellence.

In 2005 Fusion IP signed a 10-year agreement with the University of Sheffield for the exclusive rights to commercialise any university-owned medical life science IP, through either licensing or the creation of spinout companies.

In July 2008 Fusion IP signed a new expanded agreement with the University of Sheffield to add all physical sciences to the original Sheffield agreement, such that Fusion IP has the rights over all the IP owned by the University of Sheffield, through either licensing or the creation of spin-out companies. The agreement gives Fusion IP the exclusive rights to all physical sciences IP until 2018, in addition to the exclusive medical life science IP rights, which currently runs to 2015.

Sheffield owns a 12.5 per cent. shareholding in Fusion IP which will be acquired by IP Group as party of the Acquisition.

Cardiff University

Cardiff University is a member of the exclusive Russell Group of research intensive universities, with an international reputation for the quality of its teaching and research, especially in the areas of energy, engineering and medicine.

In 2007, Fusion IP signed a 10 year agreement with Cardiff University for the exclusive rights to commercialise any university-owned IP, through the creation of spin-out companies.

Cardiff University owns a 10.05 per cent. shareholding in Fusion IP which will be acquired by IP Group as part of the Acquisition.

Memorandum of Understanding (MOU) Agreements

In March 2013, Fusion IP entered into two new MOU agreements with the University of Nottingham and Swansea University. These agreements complement Fusion IP's existing university partnerships by providing it with access to potentially world-class intellectual property on a more flexible partnership basis.

The University of Nottingham

Nottingham is one of the UK's top universities, with centres of excellence in aerospace, advanced manufacturing, energy and biomedical imaging and as a member of the Russell Group, it is recognised as one of the UK's leading research-intensive universities.

Under the 2013 MOU agreement, Fusion IP works in close partnership with Nottingham's in-house commercial team to identify IP with the most commercial potential and then works with the academic team to turn the original academic research into a fundable business plan. Fusion IP then invests cash and management resources to create a spin-out company, in which it owns a 10 per cent. equity shareholding of the start-up company shareholding prior to any investment.

Swansea University

Swansea is a research led university, with a number of excellent research departments, including the College of Engineering. Its newly built Institute of Life Sciences is one of the premier research facilities in Wales and the largest university campus investment by the Welsh Government.

Under the 2013 MOU agreement Fusion IP works in close partnership with Swansea's in-house commercial team to identify IP with the most commercial potential and then works with the academic team to turn the original academic research into a fundable business plan. Fusion IP then invests cash and management resources to create a spin-out company, in which it owns a 10 per cent. equity shareholding of the start-up company shareholding prior to any investment.

3. FINANCE WALES CO-INVESTMENT MOU

In 2007, Fusion IP signed a memorandum of understanding with Finance Wales, the provider of commercial funding to Welsh based SMEs, which outlined a strategy of co-investment in opportunities arising from Fusion IP's agreement with Cardiff University.

Following on from the success of this MOU, Fusion IP and Finance Wales agreed to extend the MOU by a further five years in 2013. The new MOU continues the co-investment strategy for investing in opportunities arising from Fusion IP's IP pipeline agreements with its growing portfolio of Welsh universities and provides Fusion IP with continued access to substantial additional funding for its portfolio of companies. As at 31 July 2013, Finance Wales has made 26 investments, totalling £4.9 million, in Fusion IP portfolio companies.

4. FUSION IP'S PORTFOLIO

Fusion IP has a well-balanced portfolio of more than 20 companies, in a range of engineering, nanotechnology, software and medical sectors. The companies are at varying stages of maturity, growth and profitability and seven of the most valuable companies in the portfolio are briefly described below.

Diurnal – pharma & biotech

Diurnal, a drug development company originating from the University of Sheffield announced in September 2013 that it had successfully completed the pharmacokinetic part of its Phase II CATCH (Chronocort As Treatment for Congenital adrenal Hyperplasia) clinical study. Chronocort is a modified release therapy that delivers hydrocortisone in a manner that mimics the body's natural 24-hour hormone cycle, thus combating diseases caused by cortisol deficiency. Diurnal's novel approach to drug delivery has the potential to significantly improve the lives of patients suffering from diseases such as congenital adrenal hyperplasia and adrenal insufficiency. The full read-out of the CATCH study is expected during the first quarter of 2014, and subject to a successful outcome, Diurnal would then progress to a Phase III trial.

Fusion IP holds a 43 per cent. (undiluted) shareholding in Diurnal.

Phase Focus – medical equipment & supplies

Phase Focus has developed a novel 'Virtual Lens' which is a digital replacement for the conventional image forming optics used in imaging and microscopy. Its current products include an Ophthalmic Lens Profiler that can measure soft contact lenses with unprecedented levels of resolution and accuracy; and an optical microscope used for stain-free imaging of biological cells. In February 2013, Phase Focus announced that it had entered into a licence agreement with Gatan, Inc. ("Gatan"). Gatan is one of the world's leading manufacturer of instrumentation and software used to enhance and extend the operation and performance of electron microscopes. The licence agreement provides for joint development of a range of products, including a Phase Focus Virtual Lens "add-on" product for existing electron microscopes. Once fully developed, Gatan will market the product through its worldwide sales and distribution network.

Fusion IP holds a 35 per cent. (undiluted) shareholding in Phase Focus.

Seren Photonics – energy & renewables

Seren Photonics's light emitting diode (LED) nanotechnology, developed by Professor Tao Wang from the University of Sheffield, has been shown in tests to greatly increase the efficiency of conventional phosphorconverted white LEDs and enable ultra-high bright green LEDs. Seren's technology means that either for a given power consumption, much brighter LED lamps can be manufactured, or that for equivalent light output, the power consumption of LED lamps can be significantly reduced. High brightness (HB) LEDs are set to replace incandescent lamps as governments around the world bring in legislation banning the manufacture and sale of incandescents and concerns increase about the poor light quality and environmental contamination fears from compact fluorescents. The rate of adoption is expected to accelerate as the brightness of HB LEDs increases and the cost of manufacture reduces. Seren's technology is targeted at the fast growing \$13 billion white light HB LED markets, such as back lighting for laptops and TVs, signs and displays, as well as domestic, architectural and street lighting.

Fusion IP holds a 40 per cent. (undiluted) shareholding in Seren.

Magnomatics – energy & renewables

Magnomatics, develops high torque magnetic transmissions and ultra-compact magnetically-geared motors and generators. The technology uses magnetic fields with high-powered permanent magnets to replace the meshed teeth that normally transmit mechanical power in gear systems. The magnetic fields eliminate the friction of contacting parts. As such, the super quiet, compact technology requires minimal maintenance; no oil lubrication and the gears can't be "stripped" through misuse. The product has the potential to offer new engineering possibilities ranging from efficient, gearless generators for wind turbines, to lighter and more compact motors for hybrid vehicles.

Magnomatics is currently developing products for the hybrid and electric vehicle market, is active in a range of industries, including renewable energy, automotive, aerospace and defence, and has industrial development contracts with some of the world's largest transportation/engineering companies for its PDD system.

Fusion IP holds a 39 per cent. (undiluted) shareholding in Magnomatics.

Asalus Medical Instruments – medical equipment & supplies

Asalus Medical Instruments is developing a range of innovative medical devices that aim to improve the safety and efficiency of laparoscopic surgery. Laparoscopic surgery is a modern surgical technique in which operations in the abdomen are performed through small incisions, as compared to the larger incisions needed in traditional surgical procedures.

Asalus' lead product is Ultravision, a surgical smoke clearing system for use in laparoscopic surgery, which successfully completed its 'first-in-man' trial in January 2013. The results of the trial demonstrated that Ultravision was effective in maintaining a clear visual field throughout a laparoscopic procedure without the need to deflate the abdomen or release smoke produced during surgery into the operating theatre environment. Asalus received CE mark approval for Ultravision in November 2013 and launched the system in Europe at Medica 2013.

Fusion IP holds a 44 per cent. (undiluted) shareholding in Asalus.

MedaPhor – medical equipment & supplies

MedaPhor is a Cardiff based global provider of advanced ultrasound education and training for medical professionals. Its lead product is ScanTrainer, a virtual reality ultrasound training simulator, which combines 'real-feel' haptic simulation with real patient scans and curriculum-based interactive learning, to provide fast and effective ultrasound training in a non-clinical environment.

During the last 12 months, MedaPhor has expanded its direct sales in the US and Europe, with over 100 systems now installed in eleven countries around the world and distribution agreements in Germany, Holland, Australia, China, Russia and Japan. In 2013 revenue doubled to £1.5 million (2012: £0.7 million).

MedaPhor launched its second product in the first half of 2013, the TransAbdominal ScanTrainer, which it hopes will open up the large, general medical ultrasound training market in 2014.

Fusion IP holds a 39 per cent. (undiluted) shareholding in MedaPhor.

FaultCurrent (FCL) – electrical power grid components

FCL has devised a unique magnetic fault current limiter design that protects utility electrical distribution networks from unanticipated power surges.

The need for fault current limiters is driven by a dramatic increase in electrical power system fault current levels as energy demand increases and more clean energy sources, such as wind and solar, are added to an ageing and already overburdened national electrical infrastructure.

Deployed in an electrical network substation, a fault current limiter is a smart grid system component that can help protect the grid by absorbing the destructive nature of faults, extending the life of existing network equipment and allowing utilities to defer or eliminate costly equipment replacements or upgrades. Estimates from Europe and the US suggest investing in smart grid technologies, such as fault current limiters, can save billions of dollars in replacement cost, increase safety, reliability and power quality.

Unlike competing fault current limiters currently in service, FCL's unique solution is designed to be a completely passive, 'fit and forget' permanent magnet device, that requires no external power or back-up, recovers automatically when a fault is cleared and requires minimal maintenance.

FCL expects its first full scale system to be deployed for field-testing at the end of 2014.

Fusion IP holds a 47 per cent. (undiluted) shareholding in FCL.

5. EXECUTIVE MANAGEMENT TEAM AND CHAIRMAN

David Baynes, Stuart Gall and Peter Grant comprise Fusion IP's executive management team. On completion of the Acquisition, David Baynes will join the Board of IP Group as an Executive Director and all three of the individuals will join the management team of IP Group. In addition, Doug Liversidge, the current Non-executive Chairman of Fusion IP will join the Board as a Non-executive Director on completion of the Acquisition. A short biography on each of these individuals is set out below.

David Baynes – CEO

Appointed to the Board of Fusion IP on 2 November 2004, having been a director of Fusion IP Trading since 2 January 2003.

Mr Baynes has previously worked at: Celsis International plc from its incorporation to its flotation on the full list of the London Stock Exchange in July 1993; Toad plc (now 21st Century Technology PLC), which he co-founded and was responsible for taking the company from start-up to a full listing on the London Stock Exchange in 1995; Whereonearth Limited and Codemasters Limited.

Peter Grant – Operations Director

Appointed to the Board of Fusion IP on 1 December 2004, having been a director of Fusion IP Trading since 2 January 2003.

Dr Grant has a PhD in Biochemistry from Cardiff University and has previously worked at Genzyme UK Limited; Celltech Limited; Enzymatix Limited and Celsis plc, which he co-founded and took to a full listing on the London Stock Exchange in 1993.

Stuart Gall – Commercial Director

Appointed to the Board of Fusion IP on 27 April 2005. Mr. Gall has experience in both small company startups and public companies and specialises in sales, marketing, communications and new business development.

He has previously worked at British Airways plc, The Promotions Partnership Limited, Anvil Limited and Toad plc (now 21st Century Technology PLC), which he helped take from start-up to a full listing on the London Stock Exchange in 1995.

Doug Liversidge – Non-Executive Chairman

Appointed to the Board of Fusion IP on 1 December 2004, having been a director of Fusion IP Trading since 28 November 2003. Mr Liversidge was employed for 21 years at British Steel, before moving to G W Thornton Limited as Managing Director and subsequently Chief Executive and guided the company through its flotation on the full list of the London Stock Exchange in March 1987. In 1991 Mr. Liversidge was awarded South Yorkshire Businessman of the Year. Mr. Liversidge acts as a Senior Industrial Advisor to the University of Sheffield and was awarded the CBE in the 2000 New Year's Honours List for services to industry.

6. CURRENT TRADING AND PROSPECTS

In the year ended 31 July 2013, the Fusion IP Group generated an operating profit (excluding subsidiary spin-out costs and amortisation) of £1.25 million (2012: £3.04 million). In line with expectations the Fusion IP Group reported losses before tax of £1.2 million in the year ended 31 July 2013 (2012: £0.5 million profit). In the same financial year, closing cash and deposits of £21.3 million (2012: £5.9 million) increased significantly following the £20 million fundraising completed in April 2013. The value of the Fusion IP Group's investments in non-subsidiary spin-out companies increased to £25.0 million (2012: £19.8 million).

In the same period, total revenue and portfolio returns decreased to £3.04 million (2012: £4.75 million) due to both a reduction in revenue and fewer funding rounds leading to lower net fair value gains on investments.

The net gain in the fair value of investments amounted to £1.11 million in the year ended 31 July 2013 (2012: £3.57 million). The Fusion IP Group's gains mainly arose from valuation uplifts in five (2012: eight) of the Fusion IP Group's holdings during the year, with uplifts in Diurnal and Asalus being the major components.

The Directors believe that a number of its portfolio companies are increasing in value, which will be reflected in results in the longer term.

PART IV

OPERATING AND FINANCIAL REVIEW OF IP GROUP

1. INTRODUCTION

Some of the information contained in this review and elsewhere in this document includes forward-looking statements that involve risks and uncertainties. See "Forward-looking statements" on page 30 for a discussion of important factors that could cause actual results to differ materially from the results described in the forward-looking statements contained in this document.

This review should be read in conjunction with: (i) the Group's audited annual report and accounts for the three years ended 31 December 2012 and the Group's interim results for the six months ended 30 June 2013; and (ii) the notes thereto explaining such annual report and accounts, which are incorporated by reference into this document as explained in Part VIII of this document; and (iii) the Group's half year report for the six months ended 30 June 2013.

Unless otherwise indicated, the selected financial information included in this Part IV has been extracted without material adjustment from the Group's audited annual report and accounts for the three years ended 31 December 2012. The financial information set out in this Part IV does not constitute statutory accounts for any company within the meaning of section 435 of the Companies Act.

Each Shareholder and other person contemplating a purchase of New Shares should read the whole of this document and the documents incorporated herein by reference and should not rely solely on the summary operating and financial information set out in this Part IV.

2. SIGNIFICANT FACTORS AFFECTING THE GROUP'S RESULTS OF OPERATIONS AND OUTLOOK

2.1 Overview

As described more fully in Part I of this document, IP Group was established in 2000 to commercialise scientific innovation developed in the UK's leading universities through the creation and development of spin-out companies. The Group also manages a number of venture capital funds through its FCA-regulated subsidiary, Top Technology Ventures, and allocates limited capital to the in-licensing and development of early-stage drug-discovery opportunities.

Success of the Group's operations depend on a number of factors and set out below are those factors which the Directors consider have affected the Group's results of operations to date or could do so in the future.

2.2 Commercialisation activities

2.2.1 Sourcing and evaluation of new commercialisation opportunities

The Directors consider that one of the key differentiators of the IP Group business model is its access to commercialisable IP. IP Group entered into its first long-term partnership with the University of Oxford's Chemistry Department in 2000 and now has arrangements covering eleven of the UK's leading research-intensive universities including, most recently, the entry into of an IP commercialisation agreement with the University of Manchester in February 2013.

In the last quarter of 2009, IP Group acquired a strategic stake in Fusion IP and entered into a co-investment agreement with Fusion IP relating to spin-out companies originating from Fusion IP's university partners, giving IP Group partial access to the scientific innovation from these leading research universities. In addition, in January 2011, IP Group also broadened its relationship with the University of Oxford by acquiring a stake in, and forming a commercialisation alliance with, Technikos, a specialist medical technology fund with a longterm commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering.

More recently, IP Group completed a £5.0 million strategic investment in Cambridge Innovation Capital plc in October 2013. Cambridge Innovation Capital raised £50.0 million to support the growth of innovative businesses located in the "Cambridge Cluster" and will be supported by the University of Cambridge's commercialisation office, Cambridge Enterprise. IP Group and Cambridge Innovation Capital entered into a memorandum of understanding to share information on investment and co-investment opportunities in the Cambridge Cluster and, where practicable, alongside other co-investors, to provide each other with access to such co-investment opportunities.

The Group announced on 3 December 2013 that it had signed IP commercialisation agreements with the University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme and with Columbia Technology Ventures, the technology transfer office of Columbia University. These partnerships, which have an initial pilot phase of 18 months, will focus on identifying early-stage, proof of principle opportunities based on intellectual property developed at the University of Pennsylvania and Columbia University.

The Group also has informal arrangements with other universities in the UK and it leverages the capabilities of its in-house sourcing team to help identify and pursue compelling standalone opportunities from such universities. As a result of the Group's access to IP through its Long-Term Partnerships and its Other Partnerships and Collaborations, the Directors believe that commercialisation opportunities in sufficient number and of sufficient quality will continue to be available to the Group.

Although each investment opportunity can vary significantly in its rate and manner of development, the Group has developed a rigorous investment appraisal process which is designed to enable the assessment and development of early stage (comprising incubation and seed) technology businesses, initially with low levels of cash investment. During this early stage development phase, members of the Group's in house sourcing team work closely with the businesses to shape the strategic direction of the opportunity, frequently taking an interim management role (typically at no additional cost to the relevant spin-out company) until such time as the business is sufficiently developed and has the resources to recruit an external management team. The Directors intend to continue to apply this methodology with a view to creating new investment opportunities.

2.2.2 Portfolio performance

The Group's results are impacted significantly by the performance of its portfolio companies. Progress in the portfolio can be assessed most immediately by the movement in the fair value from one period to the next. However, market volatility can mean that this does not always give an accurate or fair reflection of the progress made by individual companies.

The Directors consider that the macro environment in which the Group operates has shown some improvement since 2010 and it is believed that this has contributed, at least in part, to the increase in the fair value of the Group's portfolio over the last three years. Many of the Group's portfolio companies have achieved technical and commercial milestones during this time that have contributed to an increase in their fair value.

Over the longer term, the Directors believe that the successful attainment of commercial and technical milestones in spin-out companies should continue to result in an increase in their value either through subsequent financing rounds or through an eventual sale of the company.

Once a spin-out company in the Group's portfolio progresses beyond seed stage, additional funding is generally sought and this is used to progress towards key milestones and commercial validation (potentially including the launching of products or services or the securing of licensing arrangements), to build the senior level capability in the business and to attract experienced non-executive directors to its board. Historically, the Group has provided some level of this post-seed capital and leveraged further capital from a number of sources, including industrial partners, venture capital financiers (including the Group's managed funds where appropriate), public markets and angels and high net worth individuals. A proportion of the proceeds from the Capital Raising will be used to increase the Group's investments in spin-out companies at this stage of development.

Through the approach described above, the Group seeks to progressively eliminate risk and to monitor progress against milestones and revise strategic direction based on commercial feedback, whilst minimising capital deployed at the earlier stages of an opportunity's development, with a view to building a robust portfolio of successful post-seed companies whose fair values will increase over time.

2.2.3 Realisations

Investment Realisations arise from the sale of the Group's stakes in its portfolio companies to industrial purchasers or financial investors. Realisations generate cash proceeds for the Group and, if a sale is completed at a value above or below the investments' holding value in the Group's financial statements, a fair value gain or loss is realised which impacts the Group's financial results.

Since its formation in 2000 the Group has generated cash realisations in excess of approximately £42 million including the sale of Proximagen Group plc in 2012 for up to £375 million which resulted in an initial cash payment to the Group of £15.4 million, approximately, 35 times the Group's total investment of £0.4 million in Proximagen. During 2013, the Group realised proceeds of approximately £5.5 million.

As the Group's portfolio businesses continue to mature, management have and will continue to pursue and assess opportunities to realise cash when market conditions and/or specific circumstances make it attractive to do so.

2.3 Operating revenues

The majority of the Group's current operating revenues are generated from the following three key sources:

2.3.1 Venture capital fund management fees

The Group's commercialisation activities are reliant on its ability to source, evaluate, allocate capital to and develop new technologies arising from research carried out in UK universities and research institutions. Consequently the Group's ongoing ability to successfully identify and to create spin-out companies is dependent on the ability of research-intensive UK universities to produce IP of sufficient quality and with sufficient commercial potential and for the Group to have continued access rights to such IP.

The Group receives recurring fund management fees which are generally earned as a fixed percentage of either total funds under management or the remaining cost of investments in the portfolio of the given fund. In addition, the Group may receive performance related fees as a fixed percentage of the returns of a given fund above a generally fixed level of preferred return.

Through Top Technology Ventures, the Group's FCA-regulated venture capital fund management subsidiary, the Group currently manages three funds for which it receives fees, the £31 million IP Venture Fund, the £25 million North East Technology Fund and the £30 million IP Venture Fund II. It should however be noted that, since the Group currently has a 33 per cent. limited partnership interest in IP Venture Fund II, it is consolidated and the fees are not reflected in the Group's income statement.

While the limited partnership agreements determine that both IP Venture Fund and The North East Technology Fund and IP Venture Fund II have finite lifespans, their fund management agreements contemplate that the Group will continue as fund manager for the foreseeable future.

Factors affecting fund management fee income in the future are expected to include the level of assets held by third party funds managed by the Group, the investment performance of such third party funds, the ability of the Group to attract further funds under management in the future and the Group's continued authorisation to do so by the Financial Conduct Authority.

2.3.2 Corporate finance fees

The Group receives corporate finance advisory fees and commissions as a result of capital raising activities for certain portfolio companies and these are generally based on a fixed percentage of funds raised. Factors affecting this fee income in the future include the number and size of financings undertaken by portfolio companies and the terms negotiated by the Group as principal or agent.

The level of fees received by the Group has been, and is considered likely to continue to be, impacted by the recent challenging financing and operating environment for small technology businesses as fewer successful financings have been carried out by these businesses. However, the Group does have a track record of completing a small number of financing rounds or introducing investors in market conditions such as these.

2.3.3 Commercialisation, consultancy and business support services

The Group provides a number of commercialisation and consultancy services to its portfolio companies including the provision of executive or non-executive directors, executive search and selection, review of legal documentation and business support services. Such services can result in the Group receiving fees based on the nature and extent of services provided and factors affecting the level of fees include the number of portfolio companies, the proportion of these that require such services and the terms under which the Group may agree to provide them.

2.4 Operating and administrative expenses

As a result of its operations, the Group has three significant categories of operating expenditure being staff costs, other expenses and research and development expenditure.

2.4.1 Staff costs

A significant proportion of the Group's operating expenses arise through costs relating to the remuneration of staff and directors. Since the Group operates in a specialised sector, there is a need to attract, motivate and retain employees, the majority of which are required to be highly qualified and experienced. Staff costs include salaries, bonuses benefits and taxes thereon, as well as accounting charges as a result of certain share-based incentives used by the Group. The factors affecting staff costs include the number of staff and directors employed by the business, the competitive environment and the mix of remuneration offered by the Group.

Staff costs have seen modest increases over the past three years largely as a result of strengthening the Group's team. As the scale of the Group's activities continues to increase and in order to remain competitive in its highly specialised field, the Directors anticipate that it will be necessary to continue to build its employee base and that further increases in staff costs will be seen in 2013 and beyond.

2.4.2 Other expenses

Other expenses consists of general administrative expenditure, including rent on its four leased premises in the UK, regulatory fees, legal fees, other professional fees, office administration, travel, marketing and insurance. The total of such expenses has remained at materially similar levels in recent years as a result of the Group's operations remaining broadly consistent during this time and, subject to no significant changes in the Group's operations, the Directors anticipate that broadly similar levels will continue during 2013.

2.4.3 Research and development expenditure

In 2006, IP Group established Modern Biosciences plc, a subsidiary company, for the purposes of in-licensing and developing intellectual property relating to new therapeutic compounds. As described in more detail in Part I, through this subsidiary, and potentially new subsidiaries or other vehicles in future, the Group incurs, and intends to continue to incur, research and development expenditure in connection with the development of such new therapeutic compounds.

2.5 Taxation

No corporation tax liability has arisen during any of the Group's most recent three financial periods due to an overall loss being sustained in those periods or as a result of tax losses carried forward. In each of the three years ended 31 December 2012, 2011 and 2010 the Group has also received research and development tax credits as a result of the activities carried out by its drug discovery subsidiary, Modern Biosciences.

For tax purposes, the Directors consider that the Group has been and continues to be substantially trading in nature. Consequently, the Directors consider that the Company and other relevant members of the Group continue to meet the "investing company requirement" (i.e. the company making the disposal meets certain "trading" conditions) which must, in addition to other conditions, be satisfied in order for the Group to benefit from the substantial shareholdings exemption which provides that a gain on disposal by a company of shares (or an interest in shares or certain assets related to shares) will not normally be a chargeable gain for corporation tax purposes. As such, the Group does not recognise a provision for deferred taxation in respect of uplifts in value on equity holdings that meet the qualifying criteria.

At 31 December 2012, deductible temporary differences and unused tax losses for which no deferred tax asset had been recognised totalled £22.6 million. No asset was recognised in the Group's financial statements due to current uncertainties surrounding the reversal of the underlying temporary differences.

If UK tax legislation was to change, or the nature of the Group's activities were to change such that they no longer meet the "investing company requirement" referred to above, UK corporation tax would become due on gains arising from the disposal of the Group's investments at the then prevailing rate. In addition, if any of the Group's interest in portfolio companies does not meet (or is determined by HM Revenue & Customs not to meet) the necessary conditions for the substantial shareholdings exemption at the time when the Group disposes of its interest in such portfolio company, then the substantial shareholdings exemption would not be available to the Group in relation to that disposal and the Group would be liable for corporation tax on any gain on such disposal at the then prevailing rate. Also, were the Group to have taxable profits in the future, the currently unrecognised deferred tax asset would be recovered if the underlying temporary differences and/or unused tax losses could be deducted from such profits.

3. FINANCIAL REVIEW, RESULTS OF OPERATIONS AND KEY PERFORMANCE INDICATORS

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2012 can be found in the "Chairman's Statement", "Business Review" and "Directors' Report" sections on pages 8 to 23 and pages 50 to 51 of its annual report and accounts for the financial year ended 31 December 2012 which is incorporated by reference into this document.

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2011 can be found in the "Chairman's Statement", "Business Review" and "Directors' Report" sections on pages 6 to 23 and pages 32 to 33 of its annual report and accounts for the financial year ended 31 December 2011 which is incorporated by reference into this document.

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2010 can be found in the "Chairman's Statement", "Chief Executive Officer's Statement" and "Directors' Report" sections on pages 4 to 21 and page 25 of its annual report and accounts for the financial year ended 31 December 2010 which is incorporated by reference into this document.

See Part VIII of this document for further details of information that has been incorporated by reference into this document.

4. LIQUIDITY AND CAPITAL RESOURCES

4.1 Cash, cash equivalents and deposits

As at 31 December 2012, the Group had cash, cash equivalents and deposits of £47.9 million (2011: £60.5 million; 2010: £21.5 million), consisting of £15.4 million cash and cash equivalents and £32.5 million deposits.

The following table analyses the Group's consolidated cash flows for the financial years ended 31 December 2012, 2011 and 2010:

	2012	2011	2010
	£ million	£ million	£ million
Net cash inflow/(outflow) from operating activities	14.9	(45.5)	(2.5)
Net cash outflow from investing activities	(10.0)	(11.3)	(4.1)
Net cash inflow from financing activities	–	53.3	7.5
Net increase/(decrease) in cash and cash equivalents	4.9	(3.5)	0.9
Cash and cash equivalents at the beginning of the year	10.5	14.0	13.1
Cash and cash equivalents at the end of the year	15.4	10.5	14.0
Deposits held	32.5	50.0	7.5
Total cash, cash equivalents and deposits at	––––––	––––––	––––––
the end of the year	47.9	60.5	21.5
	––––––	––––––	––––––

Net cash inflow from operating activities

The Group's net cash inflow from operating activities for the year ended 31 December 2012 was £14.9 million (2011: net cash outflow of £45.5 million; 2010: net cash outflow of £2.5 million). The inflow was primarily due to repayment of matured deposits totalling £17.5 million offset by net operating expenses including staff employment costs, research and development expenditures and other administrative expenses.

Net cash outflow from investing activities

The Group had a £10.0 million net cash outflow from investing activities for the year ended 31 December 2012 (2011: £11.3 million; 2010: £4.1 million). The cash outflow was primarily due to the Group's equity and debt investments in portfolio companies and investments in limited partnership funds. This outflow was partially offset by proceeds from the sale of equity investments. The table below provides an analysis of cash investment by company stage and proceeds.

	2012	2011	2010
	£ million	£ million	£ million
Incubation projects	0.5	0.1	0.4
Seed businesses	4.2	2.1	1.5
Post-seed private businesses	13.1	5.8	2.9
Post-seed quoted businesses	8.5 ––––––	6.3 ––––––	2.1 ––––––
Total	26.3	14.3	6.9
Proceeds from sales of equity investments	–––––– 16.7 ––––––	–––––– 3.7 ––––––	–––––– 2.7 ––––––

Net cash inflow from financing activities

There were no cash inflows or outflows arising from financing activities for the year ended 31 December 2012 (2011: £53.3 million inflow; 2010: £7.5 million inflow).

The Group's strategy is to maintain healthy cash and short-term deposit balances that enable it to participate in all investments ratified by the Group's investment committee, whilst having sufficient cash reserves to meet all working capital requirements in the foreseeable future.

The Group's policy is to place cash which is surplus to near term working capital requirements in low risk treasury funds rated "AA" or above, or on short-term (generally defined as having an original maturity not exceeding 13 months) and overnight deposits with financial institutions that meet the Group's treasury policy criteria. The Group has no borrowings or foreign currency deposits.

Subject to the need to maintain cash for working capital requirements, there are no material legal or economic restrictions on the ability of subsidiary companies to transfer cash funds to the Company in the form of cash dividends, loans or advances. Top Technology Ventures Limited, which is authorised and regulated by the FCA, is required to maintain a minimum level of regulatory capital which is calculated based on the company's overheads. For the year to 31 December 2012, this regulatory capital requirement was approximately £0.3 million.

At 31 December 2012, the Group had cash and short-term deposits of £47.9 million. As at 31 December 2013 (being the latest practicable date prior to the publication of this document) the Group had cash, cash equivalents and deposits of £24.1 million. The movement in this balance since 31 December 2012 represents the effects of investments in portfolio companies and limited partnerships offset by the proceeds of realisations, as well as operating expenditure offset by operating income and interest.

4.2 Capital and other commitments

Pursuant to its Partnerships with a number of research intensive universities in the UK, the Group has entered into certain arrangements to invest in spin-out technologies as at 31 December 2012, as follows:

			Invested to
	First	Original	31 December	Remaining
	year of	commitment	2012	commitment
	partnership	£ million	£ million	£ million
Partnership
University of Southampton(i)	2002	5.0	3.6	1.4
King's College London(ii)	2003	5.0	1.8	3.2
University of York – CNAP(iii)	2003	0.8	0.2	0.6
University of Leeds(iv)	2005	4.2	0.4	3.8
University of Bristol(v)	2005	5.0	1.0	4.0
University of Surrey(vi)	2006	5.0	0.5	4.5
University of York(iii)	2006	5.0	0.1	4.9
Queen Mary, University of London(vii)	2006	5.0	0.7	4.3
University of Bath(viii)	2006	5.0	0.2	4.8
University of Glasgow(ix)	2006	5.0	1.1	3.9
		–––––– 45.0	–––––– 9.6	–––––– 35.4
		––––––	––––––	––––––

(i) Under the terms of an agreement entered into in 2002 between the Group, the University of Southampton and certain of the University of Southampton's subsidiaries, IP2IPO Limited agreed to make £5.0 million available for the purposes of making investments in University of Southampton spin-out companies. The contractual commitment and the basis for investment is currently under review.

• (ii) Under the terms of an agreement entered into during 2003 between the Group and King's College London ("KCL") and King's College London Business Limited (formerly KCL Enterprises Limited), the Group agreed to make £5.0 million available for the purposes of making investments in spin-out companies. Under the terms of this agreement, KCL was previously able to require the Company to make a further £5.0 million available for investments in spin-out companies on the tenth anniversary of the partnership. However, the 2003 agreement was terminated and replaced by a revised agreement on 12 November 2009. Under the revised agreement, the Group has agreed to target investing the remaining commitment of £3.2 million over a three-year period. If, and to the extent this amount is fully invested, KCL cannot require the Group to make any additional funds available. Other changes effected by the revised agreement included the removal of the Group's automatic entitlement to initial partner equity in every spin-out company and/or a share of KCL's licensing fees from intellectual property commercialisation and to the termination rights of the parties.
• (iii) In 2003 the Group entered into an agreement with the University of York. The agreement relates to a specialist research centre within the University of York; the Centre for Novel Agricultural Products ("CNAP"). The Group has committed to invest up to a total of £0.8 million in spin-out companies based on CNAP's intellectual property. In 2006 the Group extended its partnership with the University of York to cover the entire university. The Group has committed to invest £5.0 million in University of York spin outs over and beyond the £0.8 million commitment as part of the Group's agreement with CNAP. The agreement with York was amended in 2009 so as to alter the process by which the Group evaluates commercialisation opportunities and the level of initial partner equity the Group is entitled to as a result. Further, the Group's automatic entitlement to share in any of York's proceeds from out-licensing has been removed from the agreement.
• (iv) The Group extended its partnership with the University of Leeds in July 2005 by securing the right with associated contractual commitment to invest up to £5.0 million in University of Leeds spin-out companies. This agreement was revised in March 2011 so as to provide for a more detailed process by which the Group and the University of Leeds' commercialisation services team evaluate commercialisation opportunities and to remove the Group's entitlement to a share of out-licensing income generated by the University of Leeds except in certain specific circumstances where the Group is involved in the relevant out-licensing opportunity. Under the terms of the variation agreement, subject to quality and quantity of the investment opportunities, the Company, Techtran and the University of Leeds have agreed to target annual investments of at least £0.7 million in aggregate and, subject to earlier termination or the parties otherwise agreeing alternative target, to review this target on 30 April 2017.

• (v) In December 2005, the Group entered into an agreement with the University of Bristol. The Group has committed to invest up to a total of £5.0 million in University of Bristol spin-out companies.

• (vi) Under the terms of an agreement entered into in 2006 between the Group and the University of Surrey ("Surrey"), the Group has committed to invest up to a total of £5.0 million in spin-out companies based on Surrey's intellectual property.

• (vii) In July 2006, the Group entered into an agreement with Queen Mary, University of London ("QM") to invest in QM spin-out companies. The Group has committed to invest up to a total of £5.0 million in QM spin out companies.
• (viii) In September 2006, the Group entered into an agreement with the University of Bath ("Bath") to invest in Bath spinout companies. The Group has committed to invest up to a total of £5.0 million in Bath spin-out companies. The agreement with Bath was amended during 2010 so as to remove the Group's automatic entitlement to a share of the initial equity or licence fees (as applicable) received by Bath from the commercialisation of its intellectual property in the event the Group and its employees have not been actively involved in developing the relevant opportunity.
• (ix) In October 2006, the Group entered into an agreement with the University of Glasgow ("Glasgow") to invest in Glasgow spin-out companies. The Group has committed to invest up to a total of £5.0 million in Glasgow spin-out companies.

In addition, as announced on 26 February 2013, the Group has entered into a commercialisation agreement with the University of Manchester. Under the terms of the agreement, the Group will create a Proof of Principle ("PoP") funding facility for the identification and formation of new spin-out companies. The Group has agreed to make available an initial facility of up to £5m to provide capital to new proof of principle projects intended for commercialisation through spin-out companies. In return, IP Group will receive equity stakes in such spin-out companies on pre-agreed terms. IP Group has the right to invest further in these companies as they progress.

IP Venture Fund and IP Venture Fund II

IP2IPO Limited has a 10 per cent. limited partnership interest in IP Venture Fund. Pursuant to the terms of the IP Venture Fund limited partnership agreement, IP2IPO Limited has committed to invest up to £3.1 million into the fund and as at 31 December 2013 had invested a total of £2.7 million resulting in an outstanding commitment of £0.4 million.

IP2IPO Limited has a 33 per cent. limited partnership interest in IP Venture Fund II. Pursuant to the terms of the IP Venture Fund II limited partnership agreement, IP2IPO Limited has committed to invest up to £10 million into the fund and at 31 December 2013 had invested a total of £0.4 million resulting in an outstanding commitment of £9.6 million.

Off-balance sheet arrangements

Other than operating leases in respect of its leasehold properties, the Group is not a party to any material off-balance sheet arrangements.

5. CAPITALISATION AND INDEBTEDNESS

5.1 Capitalisation

The table below sets forth the Group's total capitalisation as at 30 June 2013, extracted without material adjustment from the Company's interim results for the six months ended 30 June 2013 (which are incorporated by reference into this document). This table should be read together with such interim results and the notes to those interim results incorporated by reference into this document.

	£ million
Shareholders' equity
Share capital	7.5
Legal reserves	–
Other reserves
Share premium account	150.4
Merger reserve	12.8
Total capitalisation as at 30 June 2013	–––––– 170.7

Total capitalisation excludes retained earnings, which amounted to £91.0 million at 30 June 2013.

––––––

There has been no material change to the capitalisation of the Group since 30 June 2013.

5.2 Indebtedness

The table below sets out the indebtedness of the Group as at 31 December 2013.

	£ million
Total current debt
Guaranteed	Nil
Secured	Nil
Unguaranteed/unsecured	Nil
	–––––– Nil
Total non-current debt	––––––
Guaranteed	Nil
Secured	Nil
Unguaranteed/unsecured	Nil ––––––
	Nil
	––––––

The statement of indebtedness is unaudited.

Whilst as at the date of this document the Group has no indebtedness, it may in future consider introducing a modest level of gearing into the business if this is considered to be in the best interests of the Group at that time dependent on, amongst other things, obtaining appropriate terms and Board approval.

The following table sets out the unaudited net consolidated financial funds of the Group as at 31 December 2013.

	£ million
Cash	19.1
Cash equivalents	5.0
Trading securities	–
Total liquidity	–––––– 24.1 ––––––
Current bank debt	Nil
Current portion of non-current debt	Nil
Other current financial debt	Nil ––––––
Current financial debt	Nil ––––––
Net current financial indebtedness	Nil ––––––
Non-current bank debt	Nil
Bonds issued	Nil
Other non-current financial debt	Nil ––––––
Non-current financial indebtedness	Nil ––––––
Net financial funds	24.1
	––––––

The Group has no indirect or contingent indebtedness as at 31 December 2013.

6. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT FINANCIAL RISKS

The operations of the Group and the implementation of its objectives and strategy are subject to a number of key risks and uncertainties. Risks are formally reviewed by the Board on an annual basis and appropriate procedures are put in place to monitor and, to the extent possible, mitigate these risks. Were more than one of the risks to occur, the overall impact on the Group may be compounded.

In the course of its normal operations, the Group uses a number of financial instruments including cash, deposits, and equity and debt investments in portfolio companies and is therefore exposed to a number of financial risks, the most significant of which are market, liquidity and credit risks.

(a) Market risk

(i) Price risk

The Group is exposed to equity securities price risk as a result of the equity investments and investments in limited partnerships held by the Group and categorised at fair value through profit or loss. The Group holds investments which are publicly traded on either AIM or the ISDX Markets and investments which are not traded on an active market.

The valuation of quoted and unquoted investments depends on a combination of market factors, including investor sentiment and availability of liquidity and appetite for specific asset classes, as well as the specific performance of each underlying company. As a result of the Group's focus on UK-based IP, its portfolio companies tend to be based in, or have significant operations in, the UK and are therefore influenced by the general economic climate, trading and market conditions in the UK.

The Group seeks to mitigate price risk by having an established investment appraisal process and asset-specific monitoring procedures which are subject to overall review by the Board. In a number of cases these monitoring procedures can include members of the Group's executive team and other staff serving in an advisory capacity to portfolio companies (including secondments and non-executive directorships). The Group has also established Capital Markets and Communications teams dedicated to supporting portfolio companies with fundraising activities and investor relations.

(ii) Interest rate risk

As the Group has no significant borrowings, it has only a limited interest rate risk. The primary impact to the Group is the impact on income and operating cash flow as a result of the interestbearing deposits and cash and cash equivalents held by the Group.

The Group mitigates this risk, in co-ordination with liquidity risk, by managing its proportion of fixed to floating rate financial assets.

The Group has no undrawn committed borrowing facilities.

(b) Liquidity risk

The Group is exposed to liquidity risk arising from the need to have finance available to make investments in portfolio companies and to meet payments for administrative and other costs as they fall due.

The Group seeks to manage its liquidity risk to ensure sufficient cash is available to meet foreseeable needs and to invest cash assets safely and profitably. Accordingly, the Group only places working capital on overnight deposits with clearing banks or in short-term instruments issued by reputable counterparties. The Group continually monitors rolling cash flow forecasts to ensure sufficient cash is available for anticipated cash requirements.

(c) Credit risk

Credit risk arises from the exposure to the risk of loss if counterparty fails to perform its financial obligations to the Group. This could include non-repayment of cash and cash equivalents held with financial institutions or defaults of individual trade debtors. Reasons for counterparty defaults include general economic or sector specific downturns or the failure of an individual financial institution or other entity.

The Group's credit risk is primarily attributable to its deposits, cash and cash equivalents, debt investments and trade receivables. The Group seeks to mitigate its credit risk on cash and cash equivalents by investing in treasury funds with an "AA" credit rating or above managed by institutions, or by making short-term deposits with counterparties. Short-term deposit counterparties are required to have most recently reported total assets in excess of £3 billion and, where applicable, a prime short-term credit rating at the time of investment (ratings are generally determined by Moody's or Standard & Poor's). Moody's prime credit ratings of "P1", "P2" and "P3" indicate respectively that the rating agency considers the counterparty to have a "superior", "strong" or "acceptable" ability to repay short-term debt obligations (generally defined as having an original maturity not exceeding 13 months).

The Group's exposure to credit risk on debt investments is managed in a similar way to equity price risk, as described above, through the Group's investment appraisal processes and asset monitoring procedures which are subject to overall review by the Board.

The maximum exposure to credit risk for debt investments, receivables and other financial assets is represented by their carrying amount.

Capital risk management

The Group's key objective when managing capital is to safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for Shareholders and benefits for other stakeholders. The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares, return capital or pay dividends to shareholders, or dispose of interests in selected portfolio companies.

The Group's strategy is to maintain healthy cash and short term deposit balances that enable it to participate in all investments ratified by the Group's investment committee, whilst having sufficient cash reserves to meet all working capital requirements in the foreseeable future.

Fair values of financial assets and liabilities

	Fair value and carrying value
	2012	2011
	£ million	£ million
Equity rights	7.9	13.9
Equity investments	177.9	120.4
Debt investments	3.9	3.4
Other financial assets	0.7	0.7
Contingent value rights	1.4	–
Investment in limited partnerships	4.0	3.3
Trade and other receivables	0.9	1.2
Deposits	32.5	50.0
Cash and cash equivalents	15.4	10.5
Trade and other payables	(0.4) ––––––	(0.6) ––––––
Total at 31 December	244.2	202.8
	––––––	––––––

IFRS requires financial assets to be categorised using a fair value hierarchy that reflects the significance of the inputs used in making the related fair value measurements. The level in the fair value hierarchy within which a financial asset is classified is determined on the basis of the lowest level input that is significant to that assets fair value measurement. The fair value hierarchy has the following levels:

• Level 1 Quoted prices in active markets.
• Level 2 Inputs other than quoted prices that are observable, such as prices from market transactions.
• Level 3 One or more inputs that are not based on observable market data.

The Group's investment portfolio was categorised as follows as at 31 December 2012:

	Level 1		Level 2	Level 3
	Equity	Equity	Unquoted	Equity
	investments	investments	debt	investments
	in quoted	in unquoted	investments	in unquoted
	spin-out	spin-out	in spin-out	spin-out
	companies	companies	companies	companies	Total
Group	£ million	£ million	£ million	£ million	£ million
At 1 January 2012	50.0	47.9	3.4	22.5	123.8
Investments during the year	8.5	14.5	2.6	0.7	26.3
Reclassifications during the year	3.5	(2.6)	(1.2)	0.3	–
Transfers between hierarchy levels
during the year	–	(1.2)	–	1.2	–
Disposals	(5.4)	–	(0.1)	(0.8)	(6.3)
Change in fair value in the year	28.0 ––––––	27.9 ––––––	(0.8) ––––––	(17.1) ––––––	38.0 ––––––
At 31 December 2012	84.6	86.5	3.9	6.8	181.8
	––––––	––––––	––––––	––––––	––––––

Cash, cash equivalents and deposits are considered to be level 1 assets, while the equity rights asset, other financial asset and the investments in limited partnerships are considered to be level 3 assets.

PART V

HISTORICAL FINANCIAL INFORMATION

PART 1

HISTORICAL FINANCIAL INFORMATION ON IP GROUP

1. HISTORICAL FINANCIAL INFORMATION

The consolidated interim results of IP Group for the six months ended 30 June 2013 and the consolidated financial statements of IP Group and its subsidiaries included in the annual report and accounts of IP Group for each of the financial years ended 31 December 2012, 2011 and 2010, together with the audit reports thereon, are incorporated by reference into this document. BDO LLP, of 55 Baker Street, London W1U 7EU, a member firm of the Institute of Chartered Accountants in England and Wales, has issued unqualified audit opinions on the consolidated financial statements of IP Group and its subsidiaries included in the annual report and accounts of IP Group for each of the financial years ended 31 December 2012, 2011 and 2010. The independent auditor's report for the financial year ended 31 December 2012 is set out on page 54 of the annual report and accounts for the financial year ended 31 December 2012. The independent auditor's report for the financial year ended 31 December 2011 is set out on page 49 of the annual report and accounts of the Company for the financial year ended 31 December 2011. The independent auditor's report for the financial year ended 31 December 2010 is set out on page 41 of the annual report and accounts of the Company for the financial year ended 31 December 2010.

Please refer to Part VIII of this document for further details about information that has been incorporated by reference into this document.

2. SELECTED FINANCIAL INFORMATION ON THE GROUP

The financial information for the six months ended 30 June 2013 and the financial years ended 31 December 2012, 2011 and 2010 as set out below has been extracted without material adjustment from, and should be read together with, the consolidated interim results of IP Group for the six months ended 30 June 2013 and IP Group's audited consolidated financial statements included in its annual report and accounts for each of the financial years ended 31 December 2012, 2011 and 2010, which are incorporated by reference into this document.

	Unaudited	Audited	Unaudited	Audited	Audited
	30 June	31 December	30 June	31 December	31 December
Key consolidated statement	2013	2012	2012	2011	2010
of comprehensive income data	£ million	£ million	£ million	£ million	£ million
Portfolio return and revenue
Change in fair value of equity
and debt instruments	2.2	38.0	32.3	0.9	4.0
Profit/(loss) on disposal of
equity investments	(0.1)	11.8	0.1	2.3	0.6
Change in fair value of limited
partnership investments	0.3	0.4	0.3	0.6	0.2
Revenue from services and
other income	1.4 ––––––––	2.3 ––––––––	1.1 ––––––––	2.1 ––––––––	2.2 ––––––––
	3.8	52.5	33.8	5.9	7.0
	––––––––	––––––––	––––––––	––––––––	––––––––

	Unaudited	Audited	Unaudited	Audited	Audited
	30 June	31 December	30 June	31 December	31 December
Key consolidated statement	2013	2012	2012	2011	2010
of comprehensive income data	£ million	£ million	£ million	£ million	£ million
Administrative expenses
Research and development
expenses	(0.4)	(0.3)	(0.2)	(0.2)	(0.4)
Share-based payment charge	(0.3)	(0.8)	(0.4)	(0.7)	(0.3)
Change in fair value of Oxford
Equity Rights asset	(2.5)	(6.0)	(2.5)	(6.0)	–
Other administrative expenses	(3.0)	(5.6)	(2.6)	(5.1)	(4.7)
	–––––––– (6.2)	–––––––– (12.7)	–––––––– (5.7)	–––––––– (12.0)	–––––––– (5.4)
Operating profit/(loss)	–––––––– (2.4)	–––––––– 39.8	–––––––– 28.1	–––––––– (6.1)	–––––––– 1.6
Finance income – interest receivable	0.4	0.9	0.6	0.6	0.2
Profit/(loss) before taxation	–––––––– (2.0)	–––––––– 40.7	–––––––– 28.7	–––––––– (5.5)	–––––––– 1.8
Taxation	–	–	–	–	–
Profit/(loss) and total comprehensive
income for the period	(2.0) ––––––––	40.7 ––––––––	28.7 ––––––––	(5.5) ––––––––	1.8 ––––––––
Attributable to:
Equity holders of the Company	(1.9)	40.7	28.7	(5.5)	1.8
Non-controlling interest	(0.1)	–	–	–	–
	–––––––– (2.0)	–––––––– 40.7	–––––––– 28.7	–––––––– (5.5)	–––––––– 1.8
Earnings/(loss) per share	––––––––	––––––––	––––––––	––––––––	––––––––
Basic earnings/(loss) per IP Group Share	(0.51)	11.13	7.84	(1.76)	0.69
Diluted earnings/(loss) per IP Group Share	(0.51) ––––––––	10.71 ––––––––	7.64 ––––––––	(1.76) ––––––––	0.69 ––––––––

As a result of the issue of the Capital Raising Shares (net of expenses of approximately £2.1 million) the Company's net assets will be increased by approximately £72.9 million. The issue of the Capital Raising Shares will have no effect on the Company's earnings, save for interest earned on the net proceeds of the Capital Raising.

PART 2

HISTORICAL FINANCIAL INFORMATION ON FUSION IP

The historical financial information on Fusion IP set out in this Part 2 of Part V of this document has been extracted without material adjustment from the audited consolidated financial statements of Fusion IP included in its annual report and accounts for each of the financial years ended 31 July 2011, 2012 and 2013, which have been taken from Fusion IP's website at www.fusionip.co.uk. It is confirmed that this information has been accurately reproduced and, so far as the Company is aware and is able to ascertain from information published by Fusion IP that no facts have been omitted which would render the extracted information inaccurate or misleading. The financial information set out below does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act. Statutory accounts of Fusion IP for each of the financial years ended 31 July 2011, 31 July 2012 and 31 July 2013 have been delivered to the Registrar of Companies and Fusion IP's auditors have made a report under section 495 of the Companies Act in respect of each of those statutory accounts and each such report was an unqualified report and did not contain a statement under section 498(2) or (3) of the Companies Act.

Consolidated Statement of Comprehensive Income

			For the year ended 31 July
		2013	2012	2011
	Note	£000	£000	£000
Revenue and portfolio return
Continuing operations	5	540	705	975
Dividend income		19	19	36
Change in fair value of investments	15	1,108	3,567	3,204
Gain on disposals of subsidiaries	15	1,368 ––––––––	459 ––––––––	1,679 ––––––––
		3,035	4,750	5,894
Operating expenses
Corporate operating expenses		(1,785)	(1,708)	(1,719)
Subsidiary spin-out operating expenses		(628)	(656)	(1,196)
Amortisation of intangible assets	14	(1,988) ––––––––	(1,996) ––––––––	(1,995) ––––––––
	6	(4,401) ––––––––	(4,360) ––––––––	(4,910) ––––––––
Results from operating activities	6	(1,366)	390	984
Finance income	10	220	177	118
Finance expenses	10	(58) ––––––––	(62) ––––––––	(56) ––––––––
Profit/(loss) before taxation		(1,204)	505	1,046
Taxation	11	– ––––––––	– ––––––––	– ––––––––
Profit/(loss) and total comprehensive
profit/(loss) for the year		(1,204) ––––––––	505 ––––––––	1,046 ––––––––
Attributable to:
– owners of the parent		(959)	669	1,370
– non-controlling interests	20	(245) ––––––––	(164) ––––––––	(324) ––––––––
		(1,204) ––––––––	505 ––––––––	505 ––––––––
Basic and fully diluted profit/(loss) per share	12	(1.14)p	1.00p	2.53p

Consolidated Statement of Financial Position

			As at 31 July
		2013	2012	2011
	Note	£000	£000	£000
Non-current assets
Property, plant and equipment	13	17	12	16
Intangible assets	14	7,448	9,446	11,442
Investments	15	24,983 ––––––––	19,763 ––––––––	16,768 ––––––––
Total non-current assets		32,448 ––––––––	29,221 ––––––––	28,226 ––––––––
Current assets
Trade and other receivables	16	929	1,055	613
Deposits	17	–	2,000	–
Cash and cash equivalents	17	21,288 ––––––––	3,923 ––––––––	1,962 ––––––––
Total current assets		22,217 ––––––––	6,978 ––––––––	2,575 ––––––––
Total assets		54,665 ––––––––	36,199 ––––––––	30,801 ––––––––
Equity
Called up share capital	18	1,094	728	542
Share premium	18	63,529	44,486	39,034
Other reserves	19	3	125	3
Retained earnings		(12,518) ––––––––	(11,848) ––––––––	(12,347) ––––––––
Equity attributable to equity holders of
the parent		52,108	33,491	27,232
Non-controlling interest		– ––––––––	– ––––––––	– ––––––––
Total equity		52,108 ––––––––	33,491 ––––––––	27,232 ––––––––
Non-current liabilities
Amounts owed to related parties	21	–––––––– 2,354 ––––––––	–––––––– 2,337 ––––––––	–––––––– 3,189 ––––––––
Current liabilities
Trade and other payables	22	203 ––––––––	371 ––––––––	380 ––––––––
Total liabilities		2,557 ––––––––	2,708 ––––––––	3,569 ––––––––
Total equity and liabilities		54,665	36,199	30,801
		––––––––	––––––––	––––––––

Consolidated Statement of Changes in Equity

						Non-
	Share	Share	Other	Retained		controlling
	capital	premium	reserves	earnings	Total	interests	Total
	£000	£000	£000	£000	£000	£000	£000
At 1 August 2010	542	39,034	3	(13,853)	25,726	–	25,726
Profit and total comprehensive
profit for the year	–	–	–	1,370	1,370	(324)	1,046
Non-controlling interest attributable
to the Group	–	–	–	100	100	(100)	–
Share-based payments	–	–	–	36	36	–	36
Disposal of subsidiaries	–	–	–	–	–	424	424
At 31 July 2011	–––––– 542	–––––– 39,034	–––––– 3	–––––– (12,347)	–––––– 27,232	–––––– –	–––––– 27,232
Profit and total comprehensive
profit for the year	–	–	–	669	669	(164)	505
Non-controlling interest attributable
to the Group	–	–	–	(202)	(202)	202	–
Issue of share capital	186	4,783	–	–	4,969	–	4,969
Share-based payments	–	–	–	32	32	–	32
Part disposal of subsidiaries	–	–	–	–	–	(38)	(38)
Movement in shares to be issued	–	669	122	–	791	–	791
At 31 July 2012	–––––– 728	–––––– 44,486	–––––– 125	–––––– (11,848)	–––––– 33,491	–––––– –	–––––– 33,491
Loss and total comprehensive loss	––––––	––––––	––––––	––––––	––––––	––––––	––––––
for the year	–	–	–	(959)	(959)	(245)	(1,204)
Non-controlling interest attributable
to the Group	–	–	–	289	289	(289)	–
Issue of share capital	366	18,996	(75)	–	19,287	–	19,287
Disposal of subsidiaries	–	–	–	–	–	534	534
Movement in shares to be issued	–	47	(47)	–	–	–	–
At 31 July 2013	–––––– 1,094	–––––– 63,529	–––––– 3	–––––– (12,518)	–––––– 52,108	–––––– –	–––––– 52,108
	––––––	––––––	––––––	––––––	––––––	––––––	––––––

Consolidated Statement of Cash Flows
		Year ended 31 July
	2013	2012	2011
	£	£	£
Cash flows from operating activities
Profit/(loss) for the period	(1,204)	505	1,046
Adjustments for:
Depreciation of property, plant and equipment	7	12	26
Amortisation of intangible assets	1,988	1,996	1,995
Net finance income	(162)	(115)	(62)
Share-based payments	–	32	35
Dividend income	(19)	(19)	(36)
Gain on disposal of investments/subsidiaries	(642)	(459)	(1,679)
Change in fair value of investments	(1,834)	(3,567)	(3,204)
Changes in working capital:
(Increase)/decrease in trade and other receivables	126	(442)	(211)
Increase/(decrease) in trade and other payables	(168) ––––––––	(9) ––––––––	45 ––––––––
Net cash flows from operating activities	(1,908)	(2,066)	(2,045)
Cash flows from investing activities	––––––––	––––––––	––––––––
Purchase of property, plant and equipment	(12)	(8)	(5)
Purchase of investment	(2,592)	(2,885)	(957)
Proceeds from sales of investments	–	3,937	–
Third party investment into subsidiary spin-out companies	351	–	205
Cash transfers from/(to) longer-term bank deposits	2,000	(2,000)	–
Dividend income	19	19	36
Interest received	220	177	118
Net cash used in investing activities	–––––––– (14)	–––––––– (760)	–––––––– (603)
Cash flows from financing activities	––––––––	––––––––	––––––––
Proceeds from issue of share capital	20,035	5,026	–
Share issue costs	(748) ––––––––	(239) ––––––––	– ––––––––
Net cash flows from financing activities	19,287	4,787	–
Net increase in cash and cash equivalents	–––––––– 17,365	–––––––– 1,961	–––––––– (2,648)
Cash and cash equivalents at beginning of period	3,923 ––––––––	1,962 ––––––––	4,610 ––––––––
Cash and cash equivalents at end of period	21,288	3,923	1,962

–––––––– –––––––– ––––––––

95

Notes to the consolidated financial information – for the years ending 31 July 2011, 31 July 2012 and 31 July 2013

1. General information

Fusion IP is a public limited company which is listed on AIM, part of the London Stock Exchange, and is incorporated and domiciled in the UK. The address of its registered office is The Sheffield Bioincubator, 40 Leavygreave Road, Sheffield S3 7RD. The registered number of the Company is 5275732.

The financial information is presented in Sterling which is also the currency of the primary economic environment in which the Group operates. The financial information is presented in round thousands.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of the financial information are set out below.

Basis of preparation

The consolidated financial information principally comprises a consolidation of amounts included in the financial statements of the following companies:

			Class of
	Principal activity	Holding	shares held
Fusion IP Sheffield Limited	Holding company	100%	Ordinary
Fusion IP Cardiff Limited	Holding company	100%	Ordinary
Biofusion Licensing (Sheffield) Limited*	Dormant	100%	Ordinary
Mantelum Limited*	Dormant	100%	Ordinary
Resagen Limited*	Orphan drug	100%	Ordinary
Rhedyn Limited*	Cancer diagnostics	100%	Ordinary
Wound Genetics Limited*	Advanced wound care	100%	Ordinary
BioHydrogen Limited*	Dormant	60%	Ordinary
Extraject Technologies Limited*	Microneedle technology	60%	Ordinary
Medella Therapeutics Limited*	Cancer Therapeutics	60%	Ordinary
PH Therapeutics Limited*	Antibody therapies	60%	Ordinary
Proflu Limited*	Novel new pharmaceuticals	60%	Ordinary
Lifestyle Choices Limited*	Dormant	51%	Ordinary

*Indirectly held.

All companies are incorporated in England and Wales.

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

The consolidated financial information has been prepared under the historical cost convention, as modified by the revaluation of certain financial assets at fair value through profit and loss, as required by IAS 39 "Financial Instruments: Recognition and Measurement".

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial information, are discussed in note 4.

Changes in accounting policies

(i) New standards, interpretations and amendments effective for the first time in the year ended 31 July 2013:

The following new standards, amendments and interpretations became effective in the year ended 31 July 2013 but did not have a significant impact on the Group.

• IAS 1 (amended): Presentation of financial statements, presentation of other comprehensive income
• IAS 12 (amended): Income taxes, recovery of underlying assets

(ii) New standards, interpretations and amendments not yet effective as at 31 July 2013

The following new standards, interpretations and amendments, which have not been applied in this financial information, will or may have an effect on the Group's future financial information:

• Amendments to IFRS1: First time adoption of IFRS 1 Government loans
• Amendments to IFRS1: First time adoption of IFRS 1 Sever hyperinflation and removal of fixed dates for first time adopters
• IFRS 9: Financial instruments and subsequent amendments
• IFRS 10: Consolidated Financial Statements
• IFRS 11: Joint Arrangements
• IFRS 12: Disclosure of Interests in Other Entities
• Amendments to IFRS10, 11, 12: Transitional guidance
• Amendments to IFRS10, 12 and IAS27: Investment entities
• IFRS 13: Fair value measurement
• IAS 19 (revised): Employee benefits
• IAS 27 (revised): Separate Financial Statements
• IAS 28 (revised): Investments in Associates and Joint Ventures
• Amendments to IAS 32 and IFRS 7: Financial Instruments, on asset and liability offsetting
• Amendments to IAS 36: Recoverable amount disclosures for non-financial assets
• Amendments to IAS 39: Novation of derivatives and continuation of hedge accounting
• IFRIC 20: Stripping costs in the production phase of a surface mine
• IFRIC 21: levies
• Amendments resulting from Annual Improvements 2009-2011 Cycle

At 31 July 2013 it is not expected that these standards will have a significant impact on the Group's financial statements with the exception of IFRS10 and IFRS11, which may impact on the criteria by which the Directors assess companies the Group will consolidate. The Board is aware of the Effective Date and are reviewing the potential impact on the Group financial statements.

(iv) New standards, amendments and interpretations effective for the first time in the year ended 31 July 2012

The following new standards, amendments and interpretations became effective for the year ended 31 July 2012. These changes did not had a significant impact on the Group:

• Amendment to IAS 24: Related Party Disclosures in line with the updated standard, the Group has given greater details in disclosures about related party transactions involving the Group and other related parties – such as its university partners
• Amendment to IFRIC 14: Prepayments of a minimum funding requirement
• Amendment to IFRS 7: disclosures transfer of financial assets
• Amendments resulting from May 2010 Annual Improvements to IFRSs

(v) New standards, amendments and interpretations effective for the first time in the year ended 31 July 2011 The following IFRSs, IFRIC interpretations and amendments were adopted in the financial information for the first time in the year ended 31 July 2011:

• (i) IFRIC 19 Extinguishing financial Liabilities with Equity Instruments This interpretation is effective for annual periods beginning on or after 1 July 2010. This has not had a material impact on the Group as it has not had any 'debt or equity swaps'.
• (ii) IFRS 2 'Share-based Payment' This was amended in June 2009 and is effective for annual periods beginning on or after 1 January 2010. The Group has adopted the amendments, which impact on subsidiary companies but not the Group and has no impact on consolidation.
• (iii) IAS 32 'Financial Instruments: Presentation' This was amended in 2009 relating to classification of rights issues. The changes were effective for annual periods beginning on or after 1 February 2010. This did not have an impact on the Group as it has not carried out a rights issue.
• (iv) IAS 24 'Related Party Disclosures' (revised 2011) This became effective from 1 January 2011 and the Group has accordingly given greater detail in disclosures in note 24 about Related Party Transactions concerning transactions involving the Group and other related parties – such as its university partners.

Amendments resulting from April 2009 Annual Improvements to IFRSs – the following amendments were effective from 1 January 2010 but had no significant impact on the Group.

• (i) IFRS 5 'Non-current Assets Held for Sale and discontinued Operations'
• (ii) IFRS 8 'Operating Segments'
• (iii) IAS 1 'Presentation of Financial Statements'
• (iv) IAS 7 'Statement of Cash Flows'
• (v) IAS 17 'Leases'
• (vi) IAS 36 'Impairment of Assets'
• (vii) IAS 38 'Intangible Assets'
• (viii) IAS 39 'Financial Instruments: recognition and measurement'

Amendments resulting from May 2010 Annual Improvements to IFRSs – the following amendments were effective from 1 July 2010, but had no significant impact on the Group:

• (i) IFRS 3 'Business Combinations'
• (ii) IAS 27 'Consolidated and Separate Financial Statements'

Amendments resulting from May 2010 Annual Improvements to IFRSs – the following amendments were effective from 1 January 2011, but had no significant impact on the Group.

• (i) IFRS 7 'Financial Instruments: Disclosures'
• (ii) IAS 1 'Presentation of financial statements'
• (iii) IAS 34 'Interim Financial Reporting;
• (iv) IFRIC 13 (amendment) 'Customer Loyalty Programmes'
• (v) IFRIC 14 (amendment) 'The Limit on a Defined Benefit Asset'

Going concern

The Group has cash and deposit balances as at 31 July 2013 of £21,288,000 (2012: £5,923,000; 2011: £1,962,000). The Directors have prepared and review on a regular basis financial forecasts based upon assumptions as to funding, investments in new and existing spin-out companies and the realisation of assets, along with other factors known to have a significant impact on results. Based upon these, the Directors have concluded that the Group has adequate working capital and cash balances to operate for the foreseeable future and that it is appropriate to use the going concern basis of preparation for this financial information.

Basis of consolidation

Subsidiaries

The Group's consolidated financial information consists of Fusion IP and all of its subsidiaries. The consolidated financial information excludes intra-group transactions.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control and continues through to the date control ceases. Control consists of the power to govern the financial and operating policies of the entity in order to obtain benefits from its activities, usually by holding more than 50 per cent. of the voting rights or by way of contractual agreement.

The cost of acquisition is measured at fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the transaction are expensed as incurred. The excess of the cost of acquisition over the fair value of the Group's share of identifiable assets, liabilities and contingent liabilities is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of comprehensive income.

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any noncontrolling interests and other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the statement of comprehensive income. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as a spin-out investment as detailed below.

Spin-out investments

Spin-out investments are entities over which the Group has significant influence, but not control, generally accompanied by a shareholding of less than 50 per cent. of the equity or voting rights. Spin-out investments that are held by the Group with a view to the ultimate realisation of capital gains are accounted for in accordance with IAS 39 "Financial Instruments: Recognition and Measurement" and upon initial recognition are designated at fair value through profit or loss. The treatment is permitted by IAS 28, in which investments held by entities which are akin to venture capitalist organisations can be excluded from its scope.

Dilution gains and losses arising in spin-out investments are recognised in the statement of comprehensive income.

Dividends received from spin-out investments are recognised in the statement of comprehensive in the period in which they are received.

Loan investments

Loan investments are generally unquoted loan instruments, which are convertible to equity at a future point in time. Such instruments are considered hybrid instruments containing a fixed rate of debt host contract with an embedded equity derivative. The Group designates the entire hybrid contract at fair value through the statement of comprehensive income on initial recognition and, accordingly, the embedded derivative is not separated from the host contract and accounted for separately. The fair value of loan instruments is established by calculating the present value of expected future cash flows associated with the instrument.

Transactions with minority shareholders – "economic entity approach"

The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is deducted from equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. For disposals to non-controlling interests, differences between any proceeds received and the relevant share of noncontrolling interests are also recorded in equity.

Operating segments

An operating segment is a group of assets and operations, which are identifiable on the basis of internal reports that are regularly reviewed by the Board, which analyse the Group in order to allocate the resources to the segment and to assess its ongoing performance.

Property, plant and equipment

All property, plant and equipment is shown at cost less depreciation and impairment. Depreciation is provided to write off the cost, less the estimated residual value, by equal instalments over the expected useful economic lives as follows:

Demonstration prototypes	–	2 to 3 years
Office/laboratory equipment	–	3 to 5 years
Computer equipment	–	4 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the statement of comprehensive income.

IP rights

IP rights comprise IP, patents and licences purchased by the Group together with the IP pipelines with Cardiff University and The University of Sheffield. The Group's view is that these assets have a finite life of ten years and to that extent they should be amortised over their respective unexpired periods with provision made for any impairment when required. IP rights are tested annually for impairment and are carried at cost less accumulated impairment losses.

Impairment of intangible assets

Assets that are subject to amortisation are tested for impairment annually as a matter of policy. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and the value in use. For the purposes of assessing impairments, assets are grouped at the lowest levels for which there are largely independent cash flows (cash-generating units (CGUs)).

Research and development expenditure

Expenditure on research activities is recognised in the statement of comprehensive income as an expense incurred.

Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends to, and has the technical ability and sufficient resources to, complete development and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the statement of comprehensive income as an expense as incurred.

Financial assets

The Group classifies its financial assets into one of the categories listed below, depending on the purpose for which the asset was acquired. None of the Group's assets are categorised as held to maturity or available for sale.

In respect of regular purchases and sales, these are recognised on the trade-date – the date on which the Group commits to purchasing or selling the asset. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or the Group has transferred substantially all risks and rewards of ownership.

Financial assets at fair value through profit or loss

Spin-out investments and associated loans that are held by the Group with a view to the ultimate realisation of capital gains are designated as financial assets at fair value through profit and loss. Realised and unrealised gains on financial assets at fair value through profit or loss are included in the statement of comprehensive income in the period they arise.

Cost

Where the investment being valued was itself made recently, its cost may provide a good indication of fair value unless there is objective evidence that the investment has since been impaired, such as observable data suggesting deterioration of the financial, technical, or commercial performance of the underlying business.

Price of recent investment

The fair value of unlisted securities is established using IPEVCV guidelines. The valuation methodology used most commonly by the Group is the "price of recent investment". The following considerations are used when calculating the fair value using the price of recent investment guidance:

• where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value;
• where there has been any recent investment by third parties, the price of that investment will provide a basis for the valuation; and
• where a fair value cannot be estimated reliably the investment is reported at cost unless there is evidence that the investment has been impaired.

Other valuation techniques

Where spin-out investments are trading profitably and are cash generative, there is usually no readily ascertainable value from following the "price of recent investment" methodology. In these circumstances the Group considers alternative methodologies in the IPEVCV guidelines, such as discounted cash flows ("DCF") or price-earnings multiples. DCF involves estimating the fair value of a business by calculating the present value of expected future cash flows, based on the most recent forecasts in respect of the underlying business.

When using the earnings multiple methodology, earnings before interest and tax ("EBIT") are generally used, adjusted to a maintainable level. A suitable earnings multiple is derived from an equivalent business or group of businesses, for which the average price-earnings multiple for the relevant sector index can generally be considered a suitable proxy. This multiple is applied to earnings to derive an enterprise value which is then discounted to reflect non-marketability and other risks inherent to businesses in early stages of operations.

Other receivables

Other receivables are non-derivative financial assets with fixed or determined payments that are not quoted in an active market. They are included in current assets and comprise "trade and other receivables", "deposits" and "cash and cash equivalents". They are carried at cost less any provision for impairment.

Deposits

Deposits comprise longer term deposits held with financial institutions with an original maturity of greater than three months.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits held with financial institutions with an original maturity of three months or less.

Payments on account

Payments on account are recorded within trade and other receivables and represent the transfer of funds in advance to The University of Sheffield held on the balance sheet of Fusion IP Sheffield Limited. The payments on account are held at cost, less any amounts transferred to investments on account of the acquisition of interests in spin-out companies or the transfer of IP from The University of Sheffield.

Trade and other payables

Trade and other payables comprise trade payables and other short-term monetary liabilities, which are recognised at amortised cost. Unless otherwise indicated, the carrying amounts of the Group's financial liabilities are a reasonable approximation of their fair value.

Non-current liabilities owed to related parties

Non-current liabilities owed to related parties relate to loan notes and accrued interest due to The University of Sheffield and Cardiff University arising from the purchase of the Group's interest in its portfolio of spinout companies. These amounts are repayable on the earlier of the sale by Fusion IP of the underlying share capital in the Company, or the Company making dividend payments, or ten years from the day of issue should the spin-out company generate a return. These amounts are only payable to the extent that any gain or dividend is received by Fusion IP, and can be cancelled by Fusion IP by the return of shares to which they relate to The University of Sheffield or Cardiff University respectively. They are recognised at amortised cost, which is a reasonable approximation of fair value.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight line basis over the period of the lease.

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in the statement of comprehensive income except to the extent that they relate to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Employment benefits

Pension obligations

The Group does not operate any pension schemes for employees but makes contributions to employee personal pension schemes on an individual basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due.

Share-based payments

Share-based incentive arrangements are provided to Directors and certain employees. Share options granted are valued at the date of grant using the Black-Scholes option pricing model and are expensed on a straight line basis over the vesting period to operating profit.

Revenue recognition

Revenue comprises:

• fees for various advisory and fund management services which are recognised in the statement of comprehensive income when the related services are performed and when considered recoverable; and
• licence fees which are recognised in full upon signing once all the Group's obligations have been completed, in accordance with the substance of the agreement.

Corporate operating expenses

Corporate operating expenses reflect the costs associated with running the central functions of the Group. The costs are contained with the Parent Company, Fusion IP and the two wholly owned subsidiaries: Fusion IP Sheffield Limited and Fusion IP Cardiff Limited.

Subsidiary spin-out operations

Subsidiary spin-out operating expenses reflect the costs associated with running the early stage spin-out companies in the period from when they are first incorporated through to when they have completed thirdparty venture capital funding which then dilutes the Group's holding below 50% of the equity or voting rights. At this stage the spin-out company is then de-consolidated and accounted for as a financial asset held at fair value.

3. Financial risk management

In the normal course of business, the Group uses certain financial instruments including cash, equity investments and loans to its portfolio of spin-out companies. Loans to spin-out companies are treated on the same basis as equity for valuation purposes.

Risk management objectives

The Group is exposed to a number of risks through the performance of its normal operations. The most significant are liquidity and market price risk. Income from surplus funds is dependent on market interest rates.

The Group's main objective in using financial instruments is to promote the commercialisation of IP held by technology businesses through the raising and investing of funds for this purpose. The Group's policies in calculating the nature, amount and timing of investments are determined by planned future investment activity.

Due to the nature of the Group's activities, the Directors do not consider it necessary to use derivative financial instruments to hedge the Group's exposure to fluctuations in interest rates, as these exposures have not been significant during the period covered by this report.

Interest rate risk profile of financial liabilities

The Group's trade and other payables consist of short-term payables, therefore disclosures have been excluded. The amounts owed to related parties falling due after more than one year generally relate to loan notes and accrued interest due to The University of Sheffield and Cardiff University arising from the purchase of the Group's interest in its portfolio of spin-out companies. These amounts are interest bearing at a rate which tracks the London Interbank Offered Rate (LIBOR).

Borrowing facilities

The Group had no undrawn committed borrowing facilities during the period.

Currency exposures

The Group occasionally enters into transactions in currencies other than sterling. Any exposure to fluctuations in market currency exchange rates is considered immaterial from a Group perspective. Therefore no sensitivity analysis has been prepared in relation to this risk.

Interest rate risk

The Group has directly maintained special interest bearing accounts with corporate banks at variable rates of interest related to LIBOR. These deposits are made on a daily basis with minimal balances held on current account. Fixed rate deposits are placed with corporate banks where surplus funds in excess of £1m exist and interest rates above LIBOR are available. Currently no fixed rate deposits are placed due to the small differential between interest rates on fixed rate deposits and those with instant access. The current market situation is constantly reviewed and fixed rate deposits will be held should interest rates improve sufficiently.

At 31 July 2013, it is estimated that the effect of a 0.5% increase/decrease in interest rates based on the average expected cash balance for next year on profit before tax would be £87,000.

The Group's cash and deposits at 31 July 2013 amounted to £21,288,000 (2012: £5,923,000; 2011: £1,962,000).

Liquidity risk

The Group seeks to manage financial risk, and in particular liquidity risk, ensuring sufficient liquidity to allow it to meet its foreseeable requirements and to invest surplus cash in low risk instruments with reputable institutions.

Market price risk

The Group is exposed to risk in respect of equity investments and loans to spin out companies. The Group seeks to mitigate this risk by routinely monitoring the performance of the spin-out companies. The Group uses a rigorous investment appraisal process prior to deciding on investment. Regular spin-out company updates are provided to the Board on the status and valuation of investments. Most spin-out companies also have a Fusion IP Executive Director on their board that closely monitors the performance of the company against strategic milestones. The value of early stage technology and life science spin-out companies is affected by the ability to attract strategic industrial partners and venture capital institutions to invest in follow-on funding rounds, which is ultimately determined by the general economic environment and the performance of the international equity markets.

Capital management

The capital structure of the Group is a mixture of cash balances and equity comprising issued share capital and reserves as detailed in note 18. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Group looks to achieve this by endeavouring to invest in the right opportunities at the right time, balancing cash requirements with forecasts of future cash inputs.

The Group does not currently utilise debt within its capital structure. Additional cash and cash equivalents for operating and investment requirements are generated through the issue of new shares when required.

There were no changes in the Group's approach to capital management during the three years.

4. Critical accounting estimates and judgements

In the process of applying the Group's accounting policies, which are set out in note 2, the Directors have made certain judgements that have a significant effect on the amounts recognised in the financial information. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are described below.

Valuation of unquoted equity investments

The judgements required to determine the appropriate valuation methodology of unquoted equity investments means there is a risk of material misjudgement to the carrying amounts of assets and liabilities. These judgements include a decision to whether or not to impair valuations. These judgements are by nature more subjective when investments have experienced a period of time between funding rounds.

Valuations of unquoted equity investments are based on the last external funding round where one has taken place, otherwise at cost, less any provision for impairment if the most recent external funding round establishes a valuation lower than cost for the Group.

Where unquoted equity investments are trading profitably and are cash generative they will be valued using either DCF or price earnings multiples, which will be discounted to reflect non-marketability and other risks inherent to businesses in early stages of operation. The estimates included in these valuations are inherently subjective, especially where assigning non-marketability and risk discounts to unique companies. These valuations are reviewed on a regular basis based on the trading performance of the companies and decisions on whether to increase or impair the carrying value are reviewed by the Directors.

Valuation of intangible IP rights

It is Group policy to test, at least annually, whether the IP rights have suffered any impairment. There are a number of variable assumptions set out in note 14. The Directors consider that for each of these variables there is a wide range of reasonably possible alternative values, which result in a wide range of fair value estimates for the IP rights agreement. None of these estimates of fair value is considered more appropriate or relevant than any other. As a result of this, the Directors' view is that the IP rights should be amortised over the ten-year life of the agreement with provision made for any impairment when required.

Subsidiaries and spin-out investments

At the point of investing in a new spin-out company the Directors consider the definitions of a subsidiary and a spin-out investment as set out in note 2. The judgements over control of the company are assessed through:

• proportion of voting rights held;
• power to govern policies of the entity; and
• power to appoint a majority of board members.

Whilst generally considered to be a largely non-judgemental area, the choice between subsidiary and a spinout investment has a material impact on the financial information. The Directors do not consider that there have been any decisions requiring the application of significant judgement in the year ended 31 July 2013.

5. Operating segments

For the years ended 31 July 2013, 31 July 2012 and 31 July 2011 the Group's revenue and profit or loss was derived from its principal activity which encompasses technology transfer, company incubation and early stage venture capital. The Group's board which is considered to be Group's chief operating decision maker, have undertaken a review of the Group's operations and its associated business risks and consider performance of the business as one reportable segment. The portfolio of investments is reviewed with no differentiation made based on the market sector of the company or whether the company originated from the Sheffield or Cardiff IP pipeline. No distinction is made between the assessment of subsidiaries and spin-out companies.

The principal activity of the Group is based solely within the UK, hence no geographical analysis is presented.

The disclosures for the reportable segment are therefore given by the primary financial information and related notes. There are no material differences between the segment information as presented to the chief operating decision maker, and the financial information is presented under IFRS as adopted by the EU.

6. Results from operating activities

Results from operating activities have been arrived at after charging the following expenses:

		Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Depreciation on property, plant and equipment	7	12	26
Amortisation of intangible assets	1,988	1,996	1,995
Employee costs (see note 8)	1,019	994	1,139
Net operating leases – property	40	30	50
Payments to The University of Sheffield/
Cardiff University for IP mining	306	315	313
Research, development and patent costs	433	540	452
Cost of raw materials and consumables	–	–	39
Legal, professional, insurance and advisory costs	253	205	546
Administration and marketing cost	355	268	350
	–––––––– 4,401	–––––––– 4,360	–––––––– 4,910
	––––––––	––––––––	––––––––

7. Auditors' remuneration

The Group obtained the following services from the Group's auditors:

	Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Fees payable to the Company's auditors for the audit of the
Company's annual accounts	19	18	18
Fees payable to the Company's auditors and their associates
for other services:
– the audit of the Company's subsidiary spin-out companies	2	3	4

8. Employee costs

		Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Wages and salaries	853	798	926
Social security costs	108	107	114
Pension costs – contributions to monthly purchase plans	58	57	64
Share-based payments	– ––––––––	32 ––––––––	35 ––––––––
	1,019	994	1,139
	––––––––	––––––––	––––––––

The average monthly number of employees (including non-executive Directors) during the period was as follows:

	Year ended 31 July
	2013	2012	2011
Central corporate functions	14	13	13
Subsidiary spin-out companies	1	1	3
	–––––––– 15	–––––––– 14	–––––––– 16
	––––––––	––––––––	––––––––

9. Share-based payments

Share option schemes

The Company has share option schemes for both Directors and certain employees. Details of the share options held by the Directors are set out within the report on Directors' remuneration.

Each option will vest as to 1/36th of the Ordinary shares under option on the expiry of each month following the date of the grant until the third anniversary of the grant when the option shall become fully vested. Any vested portion of the options will normally be exercisable between the expiry of the third month after the date of the grant and the tenth anniversary of the date of the grant. No performance conditions are required to be met. Options will become immediately exercisable in full on the death of the option-holder for a period of twelve months from the date of death. If an option holder ceases to be employed by the Company for any reason other than death, his option (to the extent unexercised and unvested) will lapse, unless under the discretion of the Board they are allowed to continue. On a change of control or a voluntary winding-up of the Company, options may be exercised in full for a fixed period. Options will lapse on the expiry of ten years from their date of grant.

Until options are exercised, the option-holders have no voting rights in respect of the Ordinary shares under their options. Ordinary shares issued pursuant to the Share Option Agreement shall rank pari passu in all respects with the Ordinary shares already in issue except that they will not rank for any dividend or other distribution announced prior to the date of the exercise. Options are not transferable nor are they pensionable.

Warrants

On 23 March 2006, as part of a £10m Side Fund Agreement, Fusion IP issued warrants to NPI Ventures. Since this date the warrants have changed ownership and in 2012 Fusion IP was informed that they are currently held by a private equity firm. The warrants outstanding as follows:

• 1,225,000 Ordinary shares with an exercise price of £1.50;
• 1,225,000 Ordinary shares with an exercise price of £1.60;
• 612,500 Ordinary shares with an exercise price of £1.80; and
• 612,500 Ordinary shares with an exercise price of £2.20;

Movements and fair value

The movements relating to share options and warrants during the 3 years are set out below:

				Year ended 31 July
		2013		2012		2012
	Number of Share Options	Number of Warrants	Number of Share Options	Number of Warrants	Number of Share Options	Number of Warrants
Outstanding at the beginning of the period	644,999	3,675,000	699,999	–	699,999	3,675,000
Reinstated during the period	–	–	–	3,675,000	–	–
Exercised during the period	(105,000)	–	(55,000)	–	–	–
Lapsed during the period	–	–	–	–	–	(3,675,000)
Outstanding at the end of the period	————— 539,999 —————	————— 3,675,000 —————	————— 644,999 —————	————— 3,675,000 —————	————— 699,999 —————	————— – —————

In 2011, no share options or share warrants were exercised during the period. During this year no new share warrants or options were issued.

In 2012, 55,000 share options were exercised during the year, the exercise price per share was 33.5p and the weighted average market share price at the time was 57.7p.

In 2013, 105,000 share options were exercised during the year, the price per share was 33.5p and the weighted average market share price at the time of exercise was 60.9p.

In each year, the fair values are determined by using the Black-Scholes option pricing model and the assumptions used at the fair value measurement date for each year are shown in the table below:

	Year ended 31 July 2011
	Employees	Employees	Employees	Directors	Directors
Fair value at grant date	47.24p	15.65p	14.43p	47.24p	15.65p
Share price at grant	150.00p	33.50p	33.50p	150.00p	33.50p
Dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%
Expected volatility	18.52%	42.20%	42.17%	18.52%	42.20%
Term to maturity	5.5 years	5.5 years	4.5 years	5.5 years	5.5 years
Risk free interest rate	4.46%	3.00%	3.00%	4.46%	3.00%
Number of shares under option	33,333	50,000	400,000	99,999	150,000

			Year ended 31 July 2012
	Employees	Directors	Directors	Others*	Others*	Warrants
Fair value at grant date	14.43p	47.24p	15.65p	47.24p	15.65p	43.98p to 18.83p
Share price at grant	33.50p	150.00p	33.50p	150.00p	33.50p	152.25p
Dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Expected volatility	42.17%	18.52%	42.20%	18.52%	42.20%	18.85%
Term to maturity	5 years	2.5 years	7 years	2.5 years	7 years	3.5 years
Risk free interest rate	3.00%	4.46%	3.00%	4.46%	3.00%	4.28%
Number of shares
under option	345,000	33,333	100,000	66,666	100,000	3,675,000

* other reflects share options held by the Company Secretary and the spouse of T Atkinson (deceased)

			Year ended 31 July 2013
	Employees	Directors	Directors	Others*	Others*	Warrants
Fair value at grant date	14.43p	47.24p	15.65p	47.24p	15.65p	43.98p to 18.83p
Share price at grant	33.50p	150.00p	33.50p	150.00p	33.50p	152.25p
Dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Expected volatility	42.17%	18.52%	42.20%	18.52%	42.20%	18.85%
Term to maturity	4 years	1.5 years	6 years	1.5 years	6 years	2.5 years
Risk free interest rate	3.00%	4.46%	3.00%	4.46%	3.00%	4.28%
Number of shares
under option	270,000	33,333	100,000	66,666	70,000	3,675,000

* other reflects share options held by the Company Secretary and the spouse of T Atkinson (deceased)

The expected volatility was benchmarked against the FTSE AIM All share index on those options issued on 31 July 2010 and for the previous options against an index of similar companies in the Biotech index as no historic data was available for the Company at grant date.

The fair value of any outstanding share-based options and warrants is recognised as an expense through the profit and loss account over the relevant vesting periods. The charge in 2013 was £nil (2012: £32,000; 2011: £35,000).

10. Finance income and expenses

		Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Finance expense
Interest income on short-term bank deposits	122	26	18
Interest income on loans to spin-out investments	98	151	100
	–––––––– 220	–––––––– 177	–––––––– 118
Finance expenses	––––––––	––––––––	––––––––
Interest payable on loans from related parties	(58) ––––––––	(62) ––––––––	(56) ––––––––
	(58) ––––––––	(62) ––––––––	(56) ––––––––
Net finance income	162	115	62
	––––––––	––––––––	––––––––

11. Taxation

2011
£000
–
–
––––––––
–
––––––––

Deferred tax assets of £4,570,000 (2012: £3,943,000; 2011: £3,056,000) from utilised tax losses have not been recognised as the Directors considered there to be sufficient uncertainty over the availability of future taxable profits from which the trading losses can be deducted in each year.

The Directors believe that the Group will qualify for the Substantial Shareholder Exemption (SSE) and therefore no deferred tax is provided for in respect of the fair value uplifts in valuation of certain of the equity investments.

Corporation tax in 2013 and 2012 was calculated at the rate of 20% (2011: a pro-rata of 20% and 21%) of the estimated assessable profit for the period.

The charges for each year can be reconciled to the profit/(loss) per income statement as follows:

		Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Profit/(loss) before tax	(1,204)	555	1,046
Current tax at 20% (2011 pro rated across
the year 20%/21%)	(241)	101	216
Effects of:
– Expenses not deductible for tax purposes	(672)	(120)	(999)
– Depreciation in excess of capital allowances	(1)	1	1
– UK research and development tax credits	16	(29)	(44)
– Non taxable gains	–	(768)	–
– Other adjustments	–	–	26
– Tax losses carried forward	898	815	800
Total tax charge	–––––––– –	–––––––– –	–––––––– –
	––––––––	––––––––	––––––––

12. Earnings per share

		Year ended 31 July
	2013	2012	2011
Profit/(loss) attributable to the equity holders
of the parent	(£959,000)	£669,000	£1,370,000
Weighted average number of Ordinary shares in issue	84,142,368	66,626,200	54,242,850
Basic and fully diluted (loss)/profit per share	(1.14)p	1.00p	2.53p

Basic earnings per share are calculated by dividing the profit or loss attributable to the equity holders of the parent by the weighted average number of Ordinary shares in issue during the year.

Diluted earnings per share are calculated by adjusting the weighted average number of Ordinary shares outstanding to assume conversion of all dilutive potential Ordinary shares according to IAS 33. Dilutive potential Ordinary shares include granted share options and warrants where the exercise price is less than the average market price of the Company's Ordinary shares during the year.

IAS 33 requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. Only options or warrants that are "in the money" are treated as dilutive and net loss per share would not be increased by the exercise of such warrants. Therefore no adjustment has been made to dilute earnings per share for any outstanding share options or warrants.

13. Property, plant and equipment

	Office and	Prototypes
		computer and laboratory
	equipment	equipment	Total
	£000	£000	£000
Cost
At 1 August 2010 Additions	81 4	251 1	332 5
Disposals	(6)	(252)	(258)
At 31 July 2011	–––––––– 79	–––––––– –	–––––––– 79
Additions	8	–	8
Disposals	–	–	–
At 31 July 2012	–––––––– 87	–––––––– –	–––––––– 87
Additions	12	–	12
Disposals	(18) ––––––––	– ––––––––	(18) ––––––––
At 31 July 2013	81 ––––––––	– ––––––––	81 ––––––––
Accumulated depreciation
At 1 August 2010	(52)	(222)	(274)
Charge for the year	(15)	(11)	(26)
Disposals	4 ––––––––	233 ––––––––	237 ––––––––
At 31 July 2011	(63)	–	(63)
Charge for the year	(12)	–	(12)
Disposals	–	–	–
At 31 July 2012	–––––––– (75)	–––––––– –	–––––––– (75)
Charge for the year	(7)	–	(7)
Disposals	18	–	18
At 31 July 2013	–––––––– (64) ––––––––	–––––––– – ––––––––	–––––––– (64) ––––––––
Net Book Value
At 31 July 2011	16	–	16
At 31 July 2012	–––––––– 12	–––––––– –	–––––––– 12
At 31 July 2013	–––––––– 17	–––––––– –	–––––––– 17
	––––––––	––––––––	––––––––

14. Intangible assets

	IP rights and
	patent/licences	Goodwill	Total
	£000	£000	£000
Cost
At 1 August 2010	19,978	13	19,991
Disposals	(85)	(13)	(98)
At 31 July 2011	–––––––– 19,893	–––––––– –	–––––––– 19,893
Disposals	–	–	–
At 31 July 2012	–––––––– 19,893	–––––––– –	–––––––– 19,893
Disposals	(23)	–	(23)
At 31 July 2013	–––––––– 19,870 ––––––––	–––––––– – ––––––––	–––––––– 19,870 ––––––––
Accumulated amortisation
At 1 August 2010	(6,484)	–	(6,484)
Charge for year	(1,995)	–	(1,995)
On disposals	28	–	28
At 31 July 2011	–––––––– (8,451)	–––––––– –	–––––––– (8,451)
Charge for year	(1,996)	–	(1,996)
On disposals	–	–	–
At 31 July 2012	–––––––– (10,447)	–––––––– –	–––––––– (10,447)
Charge for period	(1,988)	–	(1,988)
On disposals	13	–	13
At 31 July 2013	–––––––– (12,422) ––––––––	–––––––– – ––––––––	–––––––– (12,422) ––––––––
Net Book Value
At 31 July 2011	11,442	–	11,442
At 31 July 2012	–––––––– 9,446	–––––––– –	–––––––– 9,446
At 31 July 2012	–––––––– 7,448	–––––––– –	–––––––– 7,448
	––––––––	––––––––	––––––––

Recoverable amount of The University of Sheffield and Cardiff University IP pipeline rights

The following key variables are relevant in determining a recoverable amount for the IP pipeline rights:

• the timing and number of spin-out companies from both universities;
• dilution of percentage shareholding rates as a result of financing related spin-out companies in the future.
• disposal values and timings; and
• discount factors of 6-8 per cent. (in all 3 years)

Each year the Directors review the IP pipeline rights for any evidence of impairment. This review is based on a discounted cash flow model which looks at historic information based on key variables noted above and projects forwards over the remaining life of the IP pipeline rights and through to the exit of the spin-out companies. Based on the review in 2013, the Directors believe that there is no impairment of the IP rights and that the most appropriate treatment is for the IP rights to be amortised over the ten-year life of the agreement with provision made for any impairment when required, consistent with the treatment in the prior year. The carrying value of the Cardiff University IP rights amounted to £5,492,000 (2012: 7,086,000, 2011 £8,681,000). The carrying value of The Sheffield University IP rights amounted to £1,956,000 (2012: £2,348,000; 2011: ££2,739,000).

15. Investments

	Spin-out
	companies	Loans	Total
	£000	£000	£000
Fair value
At 1 August 2010	9,675	1,113	10,788
Additions	592	1,002	1,594
Transfers	1,182	–	1,182
Change in fair value in the year	3,604	(400)	3,204
At 31 July 2011	————— 15,053	————— 1,715	————— 16,768
Additions	2,058	827	2,885
Disposals	(3,457)	–	(3,457)
Transfers	1,371	(1,371)	–
Change in fair value in the year	3,905	(338)	3,567
At 31 July 2012	————— 18,930	————— 833	————— 19,763
Additions	1,858	757	2,615
Transfers	64	1,433	1,497
Change in fair value in the year	1,962 —————	(854) —————	1,108 —————
At 31 July 2013	22,814	2,169	24,983

The total fair value of investments of £24,983,000 (2012: 19,763,000; 2011: 16,768,000) has been determined using two valuation methods:

————— ————— —————

• Level 2 inputs other than quoted prices that are observable for the assets £24,203,000 (2012: £19,252,000; 2011–£12,802,000).
• Level 3 Inputs for the asset that are not based on observable market data £780,000 (2012: £511,000; 2011 – £3,966,000).

Fair values relating to unquoted equity investments classified as Level 3 have been determined in part or in full by a valuation method that is not supported by observable market prices or rates. Investments in i2L Research and i2L research USA, Inc have been classified as Level 3 and the individual valuations have been calculated using price-earnings multiples. The increase shown from 2012 to 2013 relates to an uplift based on the year-end price-earnings multiple calculations.

During 2013, both Absynth Biologics and FaultCurrent deconsolidated, whereby the Group's holdings in both of these companies dropped below 50 per cent. following third party investment. This led to gains on disposal of £1,368,000, and at the year end carrying values for these companies (including loans held) total £1,980,000. During 2012, gains on disposal of subsidiaries/investments of £459,000 were mainly made on the sale of the Group's investment in Simcyp Limited. In 2011, the disposal of subsidiary undertakings, whereby the Group's holdings in Diurnal Limited and Phase Focus Limited dropped below 50 per cent. following third party rounds, resulted in a gain of £1,679,000.

At July 2011, the Group had investments where it holds 20 per cent. or more of the issued share capital as follows:

As at 31 July 2011 Class of

	Principal activity	Holding	Share held
Phase Focus Limited	Lenseless microscopy	49%	Ordinary
Magnomatics Limited	Magnetic devices	48%	Ordinary
Seren Photonics Limited	High Brightness LED's	48%	Ordinary
Progenteq Limited	Cartilage replacement therapies	48%	Ordinary
Demansq Limited	Bone and soft tissue imaging products	48%	Ordinary
Mesuro Limited	Radio frequency design and test instrumentation	47%	Ordinary
Asalus Medical Instruments Limited	Medical devices	45%	Ordinary
Diurnal Limited	Hormone replacement	43%	Ordinary
Iterate Control Limited	Advance control testing software	40%	Ordinary
Astieron Limited	Cytokine therapies	38%	Ordinary
Medaphor Limited	Medical training solutions	38%	Ordinary
Adjuvantix limited	Vaccine adjutants	35%	Ordinary
Perlemax Limited	Industrial gas processes	35%	Ordinary
Art of Xen Limited	Medical uses of xenon gas	32%	Ordinary
i2L Research limited	Pesticide testing	31%	Ordinary
Abcellute Limited	Cell stabilising technology	29%	Ordinary
Simcyp Limited	Drug metabolism	21%	Ordinary

At 31 July 2011, the group had investments where it holds 20 per cent. or less of the issued share capital as follows:

As at 31 July 2011 Class of

	Principal activity	Holding	Share held
Muscagen Limited	Drug discovery	13%	Ordinary
Morvus Technology Limited	Oncology therapies	10%	Ordinary
Bitecic Limited	Clinical research and support	10%	Ordinary
Zilico Limited	Cervical cancer detection	6%	Ordinary
Regenerative Medicine Assets Limited	Regenerative medicine	4%	Ordinary
Q Chip Limited	Life science and therapeutic products	2%	Ordinary

At July 2012, the Group had investments where it holds 20 per cent. or more of the issued share capital as follows:

As at 31 July 2012			Class of
	Principal activity	Holding	Share held
Magnomatics Limited	Magnetic devices	48%	Ordinary
Progenteq Limited	Cartilage replacement therapies	48%	Ordinary
Demansq Limited	Bone and soft tissue imaging products	48%	Ordinary
Mesuro Limited	Radio frequency design and test instrumentation	47%	Ordinary
Asalus Medical Instruments	Medical devices	44%	Ordinary
Limited
Diurnal Limited	Hormone replacement	42%	Ordinary
Seren Photonics Limited	High Brightness LED's	40%	Ordinary
Iterate Control Limited	Advance control testing software	40%	Ordinary
Medaphor Limited	Medical training solutions	39%	Ordinary
Astieron Limited	Cytokine therapies	38%	Ordinary
Phase Focus Limited	Lenseless microscopy	35%	Ordinary
Adjuvantix limited	Vaccine adjutants	35%	Ordinary
Perlemax Limited	Industrial gas processes	35%	Ordinary
Art of Xen Limited	Medical uses of xenon gas	32%	Ordinary
Abcellute Limited	Cell stabilising technology	32%	Ordinary
i2L Research limited	Pesticide testing	31%	Ordinary
Nanothether Discovery Science	Drug discovery technology	22%	Ordinary
Limited

At 31 July 2012, the Group had investments where it holds 20 per cent. or less of the issued share capital as follows:

As at 31 July 2012			Class of
	Principal activity	Holding	Share held
Simm Investments Limited	Investment Company	20%	Ordinary
Muscagen Limited	Drug discovery	13%	Ordinary
Morvus technology Limited	Oncology therapies	9%	Ordinary
Zilico Limited	Cervical cancer detection	5%	Ordinary
Q Chip Limited	Life science and therapeutic products	1%	Ordinary

At 31 July 2013, the Group had investments where it holds 20 per cent. or more of the issued share capital as follows:

As at 31 July 2013 Class of

	Principal activity	Holding	Share held
Progenteq Limited	Cartilage replacement therapies	48%	Ordinary
Demansq Limited	Bone and soft tissue imaging products	48%	Ordinary
FaultCurrent Limited	Fault current limiters	47%	Ordinary
Mesuro Limited	Radio frequency design and test instrumentation	47%	Ordinary
Asalus Medical Instruments Limited	Medical devices	44%	Ordinary & preference
Diurnal Limited	Hormone replacement	43%	Ordinary
Adjuvantix limited	Vaccine adjuvants	43%	Ordinary
Absynth Biologics Limited	MRSA vaccines	43%	Ordinary &
			A Ordinary
Seren Photonics Limited	High Brightness LED's	40%	Ordinary &
			A Ordinary
Iterate Control Limited	Advance control testing software	40%	Ordinary
Magnomatics Limited	Magnetic devices	39%	Ordinary &
			A Ordinary
Medaphor Limited	Medical training solutions	39%	Ordinary
Astieron Limited	Cytokine therapies	38%	Ordinary
Phase Focus Limited	Lenseless microscopy	35%	Ordinary
Perlemax Limited	Industrial gas processes	35%	Ordinary
Art of Xen Limited	Medical uses of xenon gas	32%	Preference
i2L Research limited	Pesticide testing	31%	A & B
			Ordinary
i2L Research USA, Inc	Pesticide testing	31%	Ordinary
Nanotether Discovery Science	Drug Discovery technology	22%	Ordinary

At 31 July 2013, the Group had investments where it holds 20 per cent. or less of the issued share capital as follows:

As at 31 July 2013 Class of

Limited

	Principal activity	Holding	Share held
Simm Investments Limited	Investment company	20%	B Ordinary
Muscagen Limited	Drug discovery		13% A4 Ordinary
Morvus technology Limited	Oncology therapies	9%	Ordinary
Zilico Limited	Cervical cancer detection	5%	Ordinary&
			C Ordinary
Sarum Biosciences Limited	Antibacterial treatments	2%	Ordinary
Q Chip Limited	Life science and therapeutic products	1%	A Ordinary

All companies are incorporated in England and Wales except for i2L Research, Inc which is incorporated in the USA.

16. Trade and other receivables

	As at 31 July
	2013 2012		2011
	£000	£000	£000
Trade receivables	5	8	44
Amounts due from related parties	54	171	268
Other tax and social security	29	33	9
Other receivables	655	573	–
Prepayments and accrued income	82	132	241
Deferred tax asset	104 ––––––––	138 ––––––––	51 ––––––––
	929	1,055	613
	––––––––	––––––––	––––––––

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

Other receivables at 31 July 2012 and 2013 mainly represent an amount due in respect of the sale of Simcyp – £573,000 is held in escrow for 2 years as security for certain warranty and indemnity cover. The amount is due in early 2014.

The amounts due from related parties are detailed in note 24.

Payments on account represent the transfer of funds in advance to The University of Sheffield, details of which are set out in the accounting policy for "payments on account".

Credit risk

The Directors believe that given the majority of trade and other receivables are with related parties (primarily public sector organisations) there is little risk to credit quality.

Ageing of trade receivables

No trade receivables are past their due date and no impairment provision was considered necessary in the current or preceding years.

17. Deposits and cash and cash equivalents

		As at 31 July
	2013	2012	2011
	£000	£000	£000
Deposits	–	2,000	–

Deposits comprise treasury deposits held by the Group with an original maturity of greater than 3 months (2013) and one year (2012). The carrying amount of these assets approximates their fair value.

	2013	2012	2011
	£000	£000	£000
Cash and cash equivalents	21,288	3,923	1,962
	––––––––	––––––––	––––––––

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

18. Share capital and premium

	Year ended 31 July
	2013 2012
	£000	£000	£000
Allotted, called up and fully paid
109,437,096 (2012; 72,832,5000;
2011 54,242,850) Ordinary shares of 1p each	1,094	728	542
Share premium	63,529	44,486	39,034

The Company has one class of Ordinary shares which carry equal voting rights, equal rights to income and distribution of assets on liquidation or otherwise and no right to fixed income.

On 28 November 2011 following the successful completion of a Placing for new shares, the Company issued 18,535,000 ordinary shares of 1p each. Of the total number of shares, 8,210,000 shares were issued to IP Group and 9,675,000 shares were issued to new and existing institutional shareholders, the consideration from these shares amounted to £5,008,000 less share issue costs of £239,000. The share issue costs of £239,000, representing legal and brokerage fees incurred on the transaction, have been charged to the share premium account. The remaining 650,000 shares were issued to The University of Sheffield to satisfy a preexisting pipeline agreement and therefore had no consideration. As a result of this transaction IP Group held 26 per cent. of the Company.

The new shares issued represented 34 per cent. of the Company's then existing share capital and following the issue represented 25 per cent. of the Company's enlarged share capital.

Additionally during that year, on the exercise of share options, the Company issued a further 55,000 Ordinary shares of 1p each, the total consideration for these shares amounted to £18,000. Details of the share options are given in note 9.

On 11 April 2013 following the successful completion of a Placing for new shares, the Company issued 36,499,246 Ordinary shares of 1p each. Of the total number of shares, 3,045,000 shares were issued to IP Group and 33,318,637 shares were issued to new and existing institutional shareholders, the consideration from these shares amounted to £20,000,000 less share issue costs of £748,000. The share issue costs represent legal and brokerage fees incurred on the transaction and have been charged to the share premium account. The remaining 135,609 shares were issued to The University of Sheffield to satisfy a pre-existing pipeline agreement and therefore had no consideration. As a result of this transaction IP Group held 20 per cent. of the Company.

The new shares issued represented 50 per cent. of the Company's then existing share capital and following the issue represents 33 per cent. of the Company's enlarged share capital.

Additionally during that year, on the exercise of share options, the Company issued a further 105,000 Ordinary shares of 1p each, the total consideration for these shares amounted to £35,000. Details of the share options are given in note 9.

19. Other Reserves

The Other reserves totalling £3,000 (2012: £125,000; 2011: £3,000) comprise a capital redemption reserve of £1,000 (2012: £1,000; 2011: £1,000) and a capital reserve of £2,000 (2012: £2,000; 2011: £2,000) arising from the Company's admission to AIM in 2005 and the resulting differences on consolidation under merger accounting. The additional £122,000 in 2012 represented the 135,609 shares still to be issued in respect of the extended pipeline agreement with the University of Sheffield. These have now been issued.

20. Non-controlling interests

	As at 31 July
	2013 2012 2011
	£000	£000	£000
At 1 August	–	–	–
Disposal of subsidiary undertakings	534	–	424
Part disposal of subsidiary undertakings	–	(38)	–
Share of loss in year	(245)	(164)	(324)
Non-controlling interests attributable to Group	(289)	202	(100)
At 31 July	–––––––– –	–––––––– –	–––––––– –

The 2011 disposal of subsidiary undertakings reflects the change of the Group's holdings in Phase Focus Limited and Diurnal Limited following investment monies received from funding rounds involving third parties.

–––––––– –––––––– ––––––––

The 2012 disposal of subsidiary undertakings reflects the change of the Group's holdings in Absynth Biologics Limited following the exercise of share options.

The 2013 disposal of subsidiary undertakings reflects the deconsolidation impact of Absynth Biologics Limited and FaultCurrent Limited.

21. Non-current liabilities

	As at 31 July
	2013 2012 2011
	£000	£000	£000
Amounts owed to The University of Sheffield	769	811	731
Amounts owed to Cardiff University	1,585	1,526	1,485
Deferred consideration owed to The University of Sheffield	–	–	973
Amounts owed to related parties	–––––––– 2,354	–––––––– 2,337	–––––––– 3,189
	––––––––	––––––––	––––––––

The £769,000 owed to The University of Sheffield (2012: £751,000; 2011: 731,000) and £1,585,000 owed to Cardiff University (2012: £1,526,000 2011: £1,485,000) relate to loan notes and accrued interest arising from the purchase of the Group's interest in its portfolio of spin-out companies. These amounts are repayable on the earlier sale by Fusion IP of the underlying share capital in the company, or the company making dividend repayments, or ten years from the day of issue. These amounts are only payable to the extent that any gain or dividend is received by Fusion IP and can be cancelled by Fusion IP by the return of the shares to which they relate to The University of Sheffield or Cardiff University respectively. The additional £60,000 owed to The University of Sheffield in 2012 (2011- £nil) related to a loan with Absynth Biologics Limited, a previously consolidated subsidiary spin-out company.

In 2011, the deferred consolidation owed to The University of Sheffield related to the expanded Sheffield Agreement and represented 785,609 Ordinary shares which were still to be issued to The University of Sheffield. During 2012 a further 650,000 of these shares were issued and the remaining 135,609 reclassified to other reserves to be issued.

Maturity analysis

Due to the repayment terms described above, the date of maturity of these loans is uncertain.

22. Trade and other payables

	As at 31 July
	2013 2012		2011
	£000	£000	£000
Trade creditors	104	71	105
Amounts due to related parties	13	71	–
Other creditors	5	6	31
Other tax and social security	–	1	2
Accruals and deferred income	81 ––––––––	222 ––––––––	242 ––––––––
	203	371	380
	––––––––	––––––––	––––––––

Book values approximate to fair values at 31 July 2011, 31 July 2012, and 31 July 2013.

23. Operating lease commitments

	Year ended 31 July
	2013	2012	2011
	£000	£000	£000
Minimum commitments under non-cancellable
operating leases on property expiring:
– no later than one year	15	–	17
– Later than one year and no later than five years	–	25	–
	–––––––– 15	–––––––– 25	–––––––– 17
	––––––––	––––––––	––––––––

The lease payments represent amounts payable by the Group for its offices, accommodation and laboratory requirements in the UK (only office requirements in 2013).

24. Related party transactions

During 2013, the Group entered into a number of transactions with various related parties. All transactions were conducted on terms prevailing in an arm's length transaction.

During 2013, 2012 and 2011, the Group purchased administrative and other services from Sheffield University Enterprises Limited (SUEL), a wholly owned subsidiary of The University of Sheffield, totalling £32,118 (2012: £34,170; 2011: £49,326). At July 2011, the balance due to SUEL was £3,408 (2012: £3,459; 2011: £1,446).

During 2013, as part of the April 2013 funding round, the remaining 135,609 shares required to satisfy a preexisting pipeline agreement were issued to The University of Sheffield for no consideration, see note 18.

Fusion IP Sheffield Limited purchased IP and made contributions towards patent costs from The University of Sheffield during 2013 with a total value of £39,520 (2012: £92,767).

During 2013, Fusion IP Sheffield Limited incurred costs of £26,448 (2012: £26,124) under a secondment agreement with The University of Sheffield for services from personnel.

During 2013, Fusion IP Sheffield Limited incurred costs in respect of leased office premises and related expenses from The University of Sheffield of £21,060 (2012: £19,902).

At July 2013, the total balance due to The University of Sheffield in respect of the above transactions was £10,172 (2012: £16,428).

Fusion IP Sheffield Limited received licence income via The University of Sheffield for the year of £53,828 (2012: £35,114) with the balance owed to Fusion IP from the University at 31 July 2013 of £164 (2012: £nil).

Fusion IP Sheffield Limited purchased IP from The University of Sheffield during 2011 with a total value of £nil. These payments were taken against payments on account.

Under the terms of the agreement dated January 2007, Fusion IP Cardiff Limited paid Cardiff University £210,000 (2012: £210,000; 2011: £210,000) as payments to support the management of the IP pipeline. At 31 July 2013 the balance due to Cardiff University was £nil (2012: £nil; 2011: £nil).

During 2013, Fusion IP Cardiff Limited made payments of £7,231 (2012: £nil) to Asalus Medical Instruments Limited, a participating interest, in respect of the Cardiff office space.

During 2013, a subsidiary company, Absynth Biologics Limited, increased its loan from The University of Sheffield to £140,000 (2012: £60,000). Absynth Biologics limited deconsolidated on 10 July 2013 and therefore no balances are including as at 31 July 2013 (2012: £60,212). Interest to the point of deconsolidation of £3,936 (2012: £425) is included in finance expenses.

Under the terms of the agreement dated January 2009, Fusion IP Sheffield Limited paid The University of Sheffield £96,250 (2012: £105,000; 2011: £78,750).

During 2013, 2012 and 2011, Fusion IP continued to accrue interest due on loans in respect of the purchase of the original portfolio companies from both The University of Sheffield and Cardiff University. During 2013 an additional loan with Cardiff University for £22,301 was added in exchange for shares in Sarum Biosciences Limited.

During 2012, a subsidiary company, Absynth Biologics Limited, received a loan of £60,000 (2011: £nil) from The University of Sheffield, details of which are set out in note 21. Interest of £425 (2011: £nil) was due in the year. At 31 July 2012 the balance due to The University of Sheffield was £60,212 (2011: £nil).

During 2012, Fusion IP Sheffield Limited purchased IP and made contributions towards patent costs from The University of Sheffield during the year with a total value of £92,767 (2011: £30,545).

During 2013, 2012 and 2011, Fusion IP supplied management services to companies in which it held a participating interest totalling £310,756 (2012: £375,737; 2011: £451,554). At 31 July 2013 the amount owed to Fusion IP was £54,062 (2012: £171,134; 2011: £66,207). In 2012, this balance also included working capital support which was repaid after the year end.

During 2012 and 2011, companies in which Fusion IP held a participating interest contracted for £725,565 (2011: £441,575) of research services combined from The University of Sheffield and Cardiff University. At 31 July 2012 the combined amount owed to the universities for these contracted research services was £198,853 (2011: £88,402).

During 2013, 2012 and 2011, IP Group invested £1,220,821 (2012: £948,777; 2011: £495,207) in companies in which Fusion IP held a participating interest.

During 2013, 2012 and 2011, the directors of Fusion IP invested £5,000 (2012: £nil; 2011: £19,281) in companies in which Fusion IP held a participating interest.

PART VI

UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE ENLARGED GROUP

BDO LLP 55 Baker Street London W1U 7EU

The Directors and Proposed Directors 27 January 2014 IP Group plc 24 Cornhill London EC3V 3ND

Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT

Dear Sirs

IP Group plc (the "Company") Pro forma financial information

We report on the unaudited statement of pro forma net assets (the "Pro Forma Financial Information") set out in Part VI of the prospectus dated 27 January 2014 (the "Prospectus") which has been prepared on the basis described, for illustrative purposes only, to provide information about how the proposed acquisition of Fusion IP and the Firm Placing might have affected the financial information presented on the basis of accounting policies adopted by the Company in preparing the financial statements for the period ended 30 June 2013.

This report is required by item 20.2 of Annex I of the Commission Regulation (EC) No. 809/2004 (the "PD Regulation") and is given for the purpose of complying with that item and for no other purpose.

Responsibilities

It is the responsibility of the directors and proposed directors of the Company (the "Directors") to prepare the Pro Forma Financial Information in accordance with item 20.2 of Annex I of the PD Regulation.

It is our responsibility to form an opinion, as required by item 7 of Annex II of the PD Regulation, as to the proper compilation of the Pro Forma Financial Information and to report that opinion to you.

Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by the law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 23.1 of Annex I of the PD Regulation consenting to its inclusion in the Prospectus.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the Directors.

We planned and performed our work so as to obtain the information and explanations which we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United States of America or other jurisdictions outside the United Kingdom and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion:

• (a) the Pro Forma Financial Information has been properly compiled on the basis stated; and
• (b) such basis is consistent with the accounting policies of the Company.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I of the PD Regulation.

Yours faithfully

BDO LLP Chartered Accountants

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)

The following unaudited pro forma statement of net assets of the Group (the "pro forma financial information") has been prepared to illustrate the effect on the net assets of the Group as if the acquisition of Fusion IP and the Firm Placing had taken place on 30 June 2013.

The pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and does not, therefore, represent the Group's actual financial position or results.

The pro forma financial information is based on the consolidated net assets of the Group as at 30 June 2013, set out in the unaudited consolidated interim financial statements of the Group for the period ended 30 June 2013, and has been prepared in a manner consistent with the accounting policies adopted by the Company in preparing such information and on the basis in the notes set out below.

			Adjustments
			––––––––––––––––––––––––––––––––––––––	Net	Pro forma
	The Group	Fusion IP		Firm	net assets
	as at	as at	Acquisition	Placing	of the
	30 June 2013	31 July 2013	of Fusion IP	proceeds	Group
	(note 1) £m	(note 2) £m	(note 3) £m	(note 4) £m	£m
Assets
Non-current assets
Intangible assets	18.4	7.5	32.0	–	57.9
Property, plant and
equipment	0.2	–	–	–	0.2
Equity rights and related
acquisition costs	5.6	–	–	–	5.6
Portfolio:
– equity investments	187.2	22.8	(12.8)	–	197.2
– debt investments/loans	4.7	2.2	–	–	6.9
Limited and limited liability
partnership interests	4.4	–	–	–	4.4
Other financial interest	0.7	–	–	–	0.7
Contingent value rights	1.4 ––––––	– ––––––	– ––––––	– ––––––	1.4 ––––––
	222.6	32.5	19.2	–	274.3
Current assets	––––––	––––––	––––––	––––––	––––––
Trade and other receivables	1.3	0.9	–	–	2.2
Deposits	17.5	–	–	–	17.5
Cash and cash equivalents	20.6	21.3	(1.5)	48.6	89.0
	–––––– 39.4	–––––– 22.2	–––––– (1.5)	–––––– 48.6	–––––– 108.7
Total assets	–––––– 262.0	–––––– 54.7	–––––– 17.7	–––––– 48.6	–––––– 383.0
Liabilities	––––––	––––––	––––––	––––––	––––––
Non-current liabilities
Amounts owed to related parties	– ––––––	(2.4) ––––––	– ––––––	– ––––––	(2.4) ––––––
	– ––––––	(2.4) ––––––	– ––––––	– ––––––	(2.4) ––––––
Current liabilities
Trade and other payables	(0.4) ––––––	(0.2) ––––––	– ––––––	– ––––––	(0.6) ––––––
	(0.4)	(0.2)	–	–	(0.6)
Total liabilities	–––––– (0.4)	–––––– (2.6)	–––––– –	–––––– –	–––––– (3.0)
Net assets	–––––– 261.6	–––––– 52.1	–––––– 17.7	–––––– 48.6	–––––– 380.0
	––––––	––––––	––––––	––––––	––––––

Notes:

1. The net assets of the Group at 30 June 2013 have been extracted without material adjustment from the unaudited consolidated interim financial statements of the Group for the period ended 30 June 2013 which are incorporated by reference in this document.

Adjustments:

• 1. The consolidated net assets of Fusion IP at 31 July 2013 have been extracted without material adjustment from the financial information table on Fusion IP, set out in Part 2 of Part V of this document.
• 1. Further adjustments have been made in respect of the acquisition of Fusion IP, in order to:
• (a) Eliminate IP Group's investment in Fusion IP as at 30 June 2013 of £12.8 million.
• (b) Reflect transaction costs directly attributable to the acquisition of Fusion IP, amounting to £1.5 million.
• (c) Reflect the estimated intangible assets arising on the acquisition of Fusion IP, as follows:

For the purposes of this pro forma information, no adjustment has been made to the separate assets and liabilities of Fusion IP to reflect their fair value. The difference between the net assets of Fusion IP as stated at their book value at 31 July 2013 and the estimated consideration has therefore been presented as a single value in "Intangible assets". The net assets of Fusion IP will be subject to a fair value restatement as at the effective date of the transaction. Actual intangible assets included in the Group's next published financial statements may therefore be materially different from that included in the pro forma statement of net assets.

IP Group already holds shares in Fusion IP. Accordingly under IFRS 3 (revised 2008), the acquisition of Fusion IP is treated as a business combination achieved in stages. This requires that the effective consideration for the acquisition of Fusion IP and the resulting intangible assets arising on the acquisition of Fusion IP are calculated as follows:

	£m
Consideration payable in Company shares for the Fusion IP shares issued in respect
of the Acquisition (excluding shares already held by IP Group) (note i)	70.2
Fair value of existing Fusion IP shares held by IP Group (note ii)	13.9 ––––––
Total effective consideration for the Acquisition	84.1
Book value of net assets of Fusion IP as at 31 July 2013	52.1
Estimated intangible assets arising on the acquisition of Fusion IP	–––––– 32.0

i. The consideration payable in Company shares for the Fusion IP shares issued under the Acquisition (excluding shares already held by IP Group) is calculated based on the 39.0 million IP Group Shares to be issued to Fusion IP Shareholders pursuant to the Scheme, priced at the closing price of the Company's shares of 179.9 pence on 22 January 2014, being the latest practicable date prior to the announcement of the Acquisition.

––––––

• ii. The fair value of existing Fusion IP shares held by IP Group is calculated based on the 22 million Fusion IP Shares held by IP Group, priced at the closing price of the Fusion IP's shares of 63.0 pence, in both cases on 22 January 2014, being the latest practicable date prior to the announcement of the Acquisition. The uplift of £1.1 million from the value as at 30 June 2013 of £12.8 million is reflected in the income statement.
• 1. Adjustments to reflect the net proceeds from the Firm Placing receivable by the Company of £48.6 million (£50.0 million gross proceeds less estimated expenses relating to the Firm Placing of £1.4 million). If the Capital Raising is fully subscribed, the net proceeds receivable by the Company will be £72.9 million (being gross proceeds of £75.0 million less estimated fees relating to the Capital Raising of £2.1 million). If the Board exercises its discretion to increase the size of the Issue by a maximum of one third, the net proceeds receivable by the Company will be £97.4 million (being gross proceeds of £100.0 million less estimated fees relating to the Capital Raising of £2.6 million).
• 1. No account has been taken of the financial performance of the Group since 30 June 2013, the financial performance of Fusion IP since 31 July 2013, nor of any other event save as disclosed above.

PART VII

ADDITIONAL INFORMATION

1. RESPONSIBILITY

IP Group, the Directors and the Proposed Directors, whose names are set out on page 29 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of IP Group, the Directors and the Proposed Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect its import.

2. INCORPORATION

• 2.1 The Company was incorporated in England and Wales with registered number 04204490 on 4 April 2001 under the Companies Act 1985 as a private company limited by shares with the name De facto 929 Limited. The Company changed its name to IP2IPO Limited on 22 May 2001 and subsequently to IP2IPO Group Limited on 31 July 2001. On 29 September 2003, the Company was re-registered as a public limited company under the Companies Act 1985 and changed its name to IP2IPO Group plc. On 25 April 2006, the Company changed its name to IP Group plc.
• 2.2 The principal legislation under which the Company operates is the Companies Act and the regulations made thereunder. The Existing Shares are listed on the Official List and admitted to trading on the main market for listed securities of the London Stock Exchange.
• 2.3 The registered office, and the principal place of business, of the Company is at 24 Cornhill, London EC3V 3ND, United Kingdom (telephone number +44 (0)845 074 2929), which is also the business address of each of the Directors.

3. SHARE CAPITAL

• 3.1 As at 24 January 2014 (being the latest practicable date prior to the publication of this document), the issued share capital of the Company was £7,505,177.18 divided into 375,258,859 Shares, each of which was fully paid.
• 3.2 Between 1 January 2010 and 31 December 2012, the issued share capital of the Company increased from £5,115,273.28 divided into 255,763,664 Shares to £7,315,273.28 divided into 365,763,664 Shares as a result of the issue of 110,000,000 Shares on 23 June 2011, pursuant to a placing and open offer of the Company.
• 3.3 In April 2013, the Group issued 9,495,195 Shares at nominal value in order to settle 2010 LTIP awards which achieved their vesting conditions and consequently became due to the Group's employees.
• 3.4 Immediately following completion of the Firm Placing and the Placing, Open Offer and Offer for Subscription (and assuming that no further Shares are issued as a result of any provisional awards of Shares under the LTIP between the date of the publication of this document and the date of Capital Raising Admission and that the Capital Raising in a size of £75.0 million is fully subscribed), the issued share capital of the Company will be £8,414,274.30 divided into 420,713,715 Shares. If the Board exercises its right to increase the size of the Capital Raising by one third and the increased Capital Raising is fully subscribed, the issued share capital of the Company (based on the same assumptions) will then be £8,717,298.38 divided into 435,864,919 Shares. These figures exclude any Consideration Shares that may be issued in connection with the Acquisition.
• 3.5 Resolutions are set out in the Notice of General Meeting that is to be found at the end of this document and it is proposed that these resolutions will be voted on at the General Meeting to be held on 12 February 2014 for the purpose of implementing the Capital Raising by:

• (1) approving the terms of the Capital Raising and directing the Directors to implement it;

• (2) authorising the Directors for the purpose of section 551 of the Companies Act to exercise all the power of the Company to allot equity securities (as defined in section 510 of the Companies Act) in the Company up to an aggregate nominal amount of £1,212,121.20 pursuant to the Capital Raising such authority to expire on the date three months after passing of the Resolution and before such expiry the Company may make any offer or agreement which would or might require shares to be allotted after such expiry and the directors may allot such shares pursuant to any such offer or agreement as if the authority conferred by this Resolution had not expired.

• (3) empowering the Directors pursuant to section 570 of the Companies Act to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the foregoing resolution, as if section 560(1) of the Companies Act did not apply to such allotment up to an aggregate nominal amount of £1,212,121.20 pursuant to the Capital Raising. The authority given by this resolution shall expire at such time as the authority conferred by the foregoing resolution shall expire save that, before the expiry of this power, the Company may make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities pursuant to such offer or agreement as if the power conferred hereby had not expired.

These authorities are in addition, and without prejudice, to all existing authorities granted to the Directors to allot shares or equity securities and grant rights to subscribe for or to convert any security into such shares in the Company.

• 3.6 On 14 May 2013, by or pursuant to resolutions passed by the Shareholders at the annual general meeting of the Company:
• (a) the Directors were generally and unconditionally authorised for the purposes of section 551 of the Companies Act to exercise all the powers of the Company to:
  • (i) allot shares in the Company and to grant rights to subscribe for or convert any security into such shares in the Company ("Rights") up to an aggregate nominal amount of £2,438,948.06 (being approximately one third of the Company's total ordinary share capital in issue as at 10 April 2013, being the latest practicable date prior to the publication of the notice of such general meeting) (such amount to be reduced by the nominal amount allotted or granted under paragraph (ii) below);
  • (ii) allot equity securities of the Company (as defined in section 560 of the Act) up to an aggregate nominal amount of £4,877,896.12 (being approximately two thirds of the Company's issued share capital as at 10 April 2013, being the latest practicable date prior to the publication of the notice of such general meeting) (such amount to be reduced by the nominal amount allotted or granted under paragraph (i) above) in connection with an offer by way of a rights issue

provided that: (i) such authorities shall expire on the earlier of the conclusion of the Company's 2014 annual general meeting and 11 August 2014; and (ii) before such expiry the Company may make any offer or agreement which would or might require shares or equity securities to be allotted or Rights to be granted after such expiry and the Directors may allot such shares or equity securities and grant such Rights pursuant to any such offer or agreement as if the authority conferred by this resolution had not expired. These authorities are in substitution for all other authorities granted to the Directors to allot shares or equity securities and grant Rights.

For the purposes of this resolution and the resolution referred to in paragraph (b) below, "rights issue" means an offer to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings (and, if applicable, to the holders of any other class of equity security in accordance with the rights attached to such class) to subscribe further securities by means of the issue of a renounceable letter (or other negotiable document) which may be traded for a period before payment for the securities is due, subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractions of such securities, the issue, transfer and/or holding of any securities in certificated form or in uncertificated form, the use of one or more currencies for making payments in respect of such offer, any such shares or other securities being represented by depositary receipts, treasury shares or any legal or practical problems arising under the laws of, or the requirements of any regulatory body or any stock exchange in, any territory;

• (b) the Directors were generally empowered pursuant to sections 570 and 573 of the Companies regulations Act to allot equity securities (as defined in section 560 of the Companies Act), payment for which is to be wholly in cash as if section 561(1) did not apply to any such allotment provided that such power shall be limited:
• (i) pursuant to the authority conferred on the Directors by paragraph (i) of the resolution referred to in paragraph (a) above:
  • (1) to or in connection with any rights issue, open offer or other pre emptive offer, open for acceptance for a period determined by the Directors, to the holders of Shares on the register on any fixed record date in proportion (as nearly as may be practicable) to their holdings of Shares (and, if applicable, to the holders of any other class of equity security in accordance with the rights attached to such class), subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractions of such securities, the issue, transfer and/or holding of any securities in certificated form or in uncertificated form, the use of one or more currencies for making payments in respect of such offer, any such shares or other securities being represented by depository receipts, treasury shares or any legal or practical problems arising under the laws of, or the requirements of any regulatory body or any stock exchange in, any territory; and
  • (2) to the allotment of equity securities (other than pursuant to paragraph (i) (1) of this resolution) up to an aggregate nominal amount of £365,842.20, representing less than 5 per cent. of the nominal value of the issued share capital of the Company as at 10 April 2013, being the latest practicable date prior to the publication of the notice of such general meeting; and
• (ii) pursuant to the authority conferred on the Directors by paragraph (ii) of the resolution referred to in paragraph (a) above, to the allotment of equity securities in connection with a rights issue.

References in such resolution to the allotment of equity securities include the sale of treasury shares (within the meaning of section 724 of the Companies Act). The authority given by this resolution expires at such time as the authorities conferred on the Directors by the resolution referred to in paragraph (a) above expire save that, before the expiry of such authority, the Company may make any offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to any such offer or agreement as if the power conferred hereby had not expired; and

• (c) the Company was authorised for the purposes of section 701 of the Companies Act to make market purchases (as defined in section 693(4) of the Companies Act) of the Company's ordinary shares on such terms and in such manner as the Directors may from time to time determine, provided that:

• (i) the maximum number of Shares hereby authorised to be purchased is 36,584,221 Shares, being approximately 10 per cent. of the Company's issued ordinary share capital as at 10 April 2013, being the latest practicable date prior to the publication of the notice of such general meeting;

• (ii) the minimum price (exclusive of expenses) that may be paid is 2 pence for each IP Group Share, being the nominal value thereof;

• (iii) the maximum price (exclusive of expenses) which may be paid for such shares for so long as the Shares are listed on the Official List be the higher of: (i) 5 per cent. above the average of the middle market quotations taken from the Daily Official List for the five business days before the purchase is made; and (ii) the amount stipulated by Article 5(i) of the EU Buy-back and Stabilisation Regulation (being the higher of the price of the last independent trade and the highest current independent bid for an IP Group Share on the trading venues where the market purchases by the Company pursuant to the authority conferred by this resolution will be carried out);
• (iv) the authority conferred by such resolution shall (unless previously renewed or revoked) expire on the earlier of the Company's 2014 annual general meeting and 11 August 2014; and
• (v) the Company may make a contract to purchase its own shares under the authority hereby conferred prior to the expiry of such authority, which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of its Shares in pursuance of any such contract.
• 3.7 The ISIN in respect of the Existing Shares is GB00B128J450. The Existing Shares are created and issued pursuant to the laws of England and Wales and are denominated in pounds sterling, being the lawful currency of England and Wales.
• 3.8 The Existing Shares are admitted to CREST. Accordingly, settlement of transactions in the Shares may take place within CREST if individual Shareholders so wish. CREST is a voluntary system and holders of Shares who wish to receive and retain share certificates are able to do so.
• 3.9 None of the shares in the capital of the Company are held by or on behalf of the Company itself or by any subsidiary of the Company.
• 3.10 Save as set out in paragraph 7 of this Part VII, the Company does not have outstanding any convertible or exchangeable securities or securities with warrants.
• 3.11 Details of the Company's significant subsidiaries are set out in paragraph 19 of this Part VII.

4. SUMMARY OF THE COMPANY'S ARTICLES

4.1 The objects of the Company are unlimited. The Articles (adopted on 27 April 2010) contain, amongst other things, provisions to the following:

4.1.1 Rights attaching to shares

(a) Income

The profits of the Company which may be distributed in respect of any financial year or other period shall be distributed pari passu among the holders of the Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them respectively.

(b) Capital

On a distribution of assets on liquidation or otherwise, the surplus assets of the Company remaining after payment of its liabilities shall be distributed amongst the holders of Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them respectively.

(c) Voting

Subject to any special rights or restrictions as to voting attached to any shares by or in accordance with the Articles and or any resolution authorising the creation of such shares, on a show of hands every member who is present in person or by proxy shall have one vote and, on a poll, every member who is present in person or by proxy shall have one vote for every share held by him.

4.1.2 Variation of class rights

• (a) Subject to the Companies Act, all or any of the rights and restrictions attached to any class of shares may from time to time be altered, added to or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of such shares.
• (b) At any such separate general meeting all the provisions of the Articles relating to general meetings shall apply, mutatis mutandis, but so that the necessary quorum shall be two or more persons holding or representing by proxy not less than one-third in nominal value of the issued shares of the relevant class, that every holder of shares of the class present or represented by proxy shall be entitled on a poll to one vote for every such share held by him, that any holder of shares of the class present in person or by proxy may demand a poll and that at any adjourned meeting of such holders one holder present in person or by proxy (whatever the number of shares held by them) shall be a quorum.
• (c) The rights conferred upon the holders of any class of shares shall be deemed to be varied or abrogated by the reduction of the capital paid up on such shares or by the allotment of further shares ranking in priority thereto for payment of a dividend or repayment of capital but shall not, unless otherwise expressly provided in the Articles, be deemed to be altered by the creation or issue of further shares ranking pari passu therewith or subsequent thereto or by a purchase by the Company of its own shares.

4.1.3 Transfers of Shares

• (a) Any member may, subject to the Articles, transfer all or any of his shares in the case of certificated shares by an instrument of transfer in the usual common form or in any other manner (whether or not by written instrument) which the Board may approve. Any written instrument of transfer of a share shall be signed by or on behalf of the transferor (and, in the case of a partly paid share by or on behalf of the transferee) and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register in respect thereof.
• (b) The Board may, without giving any reason, decline to register a transfer of any share which is not fully paid, providing that any such refusal will not prevent dealings in the shares from taking place on an open and proper basis.
• (c) The Board may refuse to register any transfer in favour of a person known to be a minor, bankrupt or person who is mentally disordered or a patient for the purpose of any statute relating to mental health.
• (d) The Board may decline to register any transfer unless any written instrument of transfer, duly stamped, is lodged with the Company, accompanied by the relevant certificate and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer, the instrument is in respect of only one class of share and, in the case of a transfer to joint holders, the number of joint holders does not exceed four.

(e) There are no provisions in the Company's Articles that would have the effect of delaying, deferring or preventing a change in control of the Company.

4.1.4 Section 793 of the Companies Act

Where any registered holder of any shares in the Company, or any named person in respect of any shares in the Company, fails to comply with any notice (a "statutory notice") given by the Board under section 793 of the Companies Act requiring him to give particulars of any interest in respect of shares in the Company, the Company may, no earlier than fourteen days after the service of the statutory notice, give the registered holder of such shares a notice (a "restriction notice") stating, or to the effect, that the shares in respect of which the default has occurred ("default shares") are subject to certain sanctions for so long as the default continues and (unless the Board otherwise determines) seven days thereafter but may be cancelled by the Board at any time.

For a shareholding of less than 0.25 per cent. of the relevant class, the only sanction is that the member may be prohibited from attending and voting at meetings (either in person or by proxy); for a shareholding of 0.25 per cent. or more of the relevant class, the Articles also provide for the withholding of the payment of dividends (including shares issued in lieu of dividends) on the default shares and, subject to those limitations being approved by the London Stock Exchange, restrictions on the transfer of the default shares.

4.1.5 General meetings

• (a) The Board shall convene and the Company shall hold general meetings and annual general meetings in accordance with the requirements of the Companies Act at such times and places as the Board shall appoint.
• (b) The Board may, whenever it thinks fit, convene a general meeting and general meetings shall be convened on such requisition or in default may be convened by such requisition as is provided by the Companies Act. If there are not within the UK sufficient directors to call a general meeting, any director or member may call the meeting.
• (c) All members of the Company are entitled to attend a general meeting.

4.1.6 Directors

• (a) Unless and until the Company in general meeting shall otherwise determine, the number of directors shall not be less than two.
• (b) Subject to the Companies Act and the Articles, no director shall be disqualified by his office from entering into any contract or arrangement with the Company either with regard to his tenure of any office or employment or as a vendor, purchaser or otherwise. Nor shall any such contract be liable to be avoided. Nor shall any director so contracting be liable to account to the Company for any remuneration, profit or other benefit realised by any such contract or arrangement by reason of such director holding that office or of the fiduciary relationship thereby established, but such director shall declare the nature of his interest in accordance with the Companies Act.

4.1.7 Restrictions on voting by directors

(a) Save as otherwise provided by the Articles, a director shall not vote (nor be counted in the quorum) on any resolution of the Board concerning his own appointment as the holder of any office or place of profit with the Company or any other company in which the Company is interested.

• (b) Save as otherwise provided in the Articles, a director shall not vote at a meeting of directors or of a committee of directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts with the interests of the Company unless his interest or duty arises only because the case falls within one or more of the following paragraphs:
• (i) the giving to him of a guarantee, security or indemnity in respect of money lent or an obligation incurred by him for the benefit of the Company or any of its subsidiaries;
• (ii) the giving of a guarantee, security or indemnity to a third party in respect of an obligation of the Company or any of its subsidiaries for which the director has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security;
• (iii) his interest arises by virtue of his subscribing or agreeing to subscribe for any shares, debentures or other securities of the Company or any of its subsidiaries, or by virtue of his being, or intending to become, a participant in the underwriting or sub-underwriting of an offer of any such shares, debentures, or other securities by the Company or any of its subsidiaries for subscription, purchase or exchange;
• (iv) any proposal concerning a retirement, death or disability benefits scheme or a share option scheme, share incentive scheme or profit-sharing scheme which either relates to both employees and directors of the Company and/or directors of any subsidiary and does not provide any director of the Company as such with any privilege or advantage not accorded to the employees to whom such scheme or fund relates or has been approved by, or is conditional on approval by, HM Revenue & Customs for tax purposes; and/or
• (v) any proposal concerning an insurance which the Company is empowered to purchase and/or maintain for the benefit of and against any liability incurred by, any directors or persons who include the directors of the Company.

4.1.8 Remuneration of directors

• (a) The remuneration (whether by way of salary, commission, participation in profits or otherwise) of any executive director shall be such as the Board may determine, and shall be either in addition to, or in lieu of, his remuneration as a director.
• (b) Each of the directors may be paid a fee at such rates as may from time to time be determined by the Board provided that the aggregate of all such fees so paid to directors (excluding amounts payable under any other Article) shall not exceed £250,000 per annum or such larger amount as may from time to time be determined by ordinary resolution of the Company.
• (c) Each director may be paid all reasonable travelling, hotel and incidental expenses of attending and returning from meetings of the Board or committees of the Board or general meetings or meetings of the holders of any class of shares or of debentures of the Company or otherwise in connection with the business of the Company or the discharge of his duties as a director. Any director who, by request, goes to reside abroad for any purposes of the Company or who performs services which in the opinion of the directors go beyond the ordinary duties of a director may be paid such extra remuneration (whether by way of salary, commission, participation in profit or otherwise) as the Board may determine and such extra remuneration shall be in addition to any remuneration provided for by, or pursuant to, any other Article.

4.1.9 Appointments to office

• (a) Subject to the Companies Act, the Company may by ordinary resolution elect any person to be a director, either to fill a vacancy or as an addition to the existing Board. The Board shall have power at any time and from time to time to appoint any person to be a director.
• (b) The Company may by special resolution, or by ordinary resolution, of which special notice has been given in accordance with the Companies Act, remove any director before the expiration of his period of office. No person other than a director retiring at the meeting shall, unless recommended by the Board, be eligible for election to the office of director at any general meeting unless, not less than seven days and not more than twenty-eight clear days before the day appointed for the meeting, there has been given notice in writing by some member entitled to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected.

4.1.10 Retirement of directors

• (a) At every annual general meeting any director:
• (i) who has been appointed by the Board since the last annual general meeting; or
• (ii) who held office at the time of the two preceding annual general meetings and who did not retire at either of them; or
• (iii) who has held office with the Company, other than employment or executive office, for a continuous period of nine years or more at the date of the meeting,

shall retire from office and may offer himself for re-appointment by the members.

(b) A director who retires at the annual general meeting shall be eligible for re-election. If he is not reappointed he shall retain office until the meeting appoints someone in his place or, if it does not do so, until the end of the meeting.

4.1.11 Borrowing Powers

• (a) Subject to the Articles and the Companies Act, the Board may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present or future) and uncalled capital or any part thereof and (subject to section 551 of the Companies Act) to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
• (b) The Board shall restrict the borrowings of the Company and exercise all other rights, powers of control or rights of influence exercisable by the Company in relation to its subsidiaries so as to secure that the aggregate amount for the time being remaining outstanding of all monies borrowed by the Group shall not at any time exceed an amount equal to four times the Adjusted Capital and Reserves (as defined by the Articles) without the previous sanction of any ordinary resolution of the Company in general meeting.

4.1.12 Pensions, gratuities etc.

The directors may, subject to the provisions of the Companies Act, exercise all the powers of the Company to grant pensions, annuities or other allowances and benefits in favour of any person including any director or former director or the relations, connections or dependants of any director or former director, provided that no pension, annuity or other allowance or benefit (except such as may be provided for by the Articles) shall be granted to a director or former director who has not been an executive director or held any other office or place of profit under the Company or any of its subsidiaries or to a person who has no claim on the Company except as a relation, connection or dependant of such a director or former director without the approval of an ordinary resolution of the Company.

4.1.13 Dividends

• (a) Subject to the Companies Act, the Company in general meeting may from time to time declare dividends to be paid to members according to their rights and interests in the profits available for distribution, but no dividend shall be declared in excess of the amount recommended by the Board.
• (b) Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides, all dividends shall be declared and paid according to the amounts paid up on the shares (but no amount paid up on a share in advance of calls shall be treated for this purpose as paid up on such share), and shall be apportioned and paid pro rota to the amounts paid up on the shares during any portion of the period in respect of which the dividend is paid.
• (c) The Board may pay to the members such interim dividends as appear to the Board to be justified by the profits of the Company and, in particular, if at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non preferential rights (as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend), but no interim dividend shall be paid on shares carrying deferred or non-preferential rights if at the time of payment any preferential dividend is in arrears.
• (d) No dividend shall be paid otherwise than out of profits available for distribution in accordance with the Companies Act.

4.1.14 Unclaimed dividends

Any dividend unclaimed for a period of twelve years from the date such dividend becomes due for payment shall be forfeited and shall revert to the Company and the payment by the Board of any unclaimed dividend, interest or other sum payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof.

4.1.15 Untraced shareholders

• (a) When the registered address of any member appears to the Board to be incorrect or out of date such member may, if the Board so resolves, be treated as if he had no registered address and thereafter the Company will not obliged to send cheques, warrants or notices of meetings to such member. No such resolution shall be proposed unless cheques or warrants sent to the registered address of such member have been returned by the Post Office or left uncashed on at least two consecutive occasions or, following one such occasion, reasonable enquiries have failed to establish any new address of such member.
• (b) If, for a period of twelve years, at least three dividends have become payable and not been cashed and no communication has been received from the member (or any person entitled to the member's shares by transmission), the Company shall be entitled to sell such shares at the best obtainable price if, after giving notice in a leading newspaper and a newspaper circulating in the region of the member's registered address, it has not had any communication from the member (or anyone entitled to his shares by transmission) within three months.

5. SUMMARY OF FUSION IP'S ARTICLES

The Fusion IP Articles contain provisions, inter alia, to the following effect:

5.1 Voting rights in respect of Fusion IP Shares

• 5.1.1 Fusion IP Shareholders shall have the right to receive notice of, to attend and to vote at all general meetings of Fusion IP. Save as otherwise provided in the Fusion IP Articles, on a show of hands each holder of shares present in person or by proxy shall have one vote and upon a poll each such holder who is present in person or by proxy shall have one vote in respect of every share held by him.
• 5.1.2 No member shall be entitled to vote at any general meeting if any call or other sum presently payable by him in respect of shares remains unpaid or if a member has been served by the Fusion IP Directors with a restriction notice in the manner described in paragraph 5.2 below.

5.2 Restrictions on Fusion IP Shares

If a member or any person appearing to be interested in shares in Fusion IP has been duly served with a notice pursuant to section 793 of the Companies Act and is in default in supplying to Fusion IP information thereby required within 14 days from the date of service of such notice Fusion IP may serve on such member or on any such person a notice (a "restriction notice") in respect of the shares in relation to which the default occurred ("Default Shares") and any other shares held at the date of the restriction notice directing that the member shall not be entitled to be present or to vote, either in person or by proxy, at any general meeting or class meeting of Fusion IP. Where the Default Shares represent at least 0.25 per cent. in nominal value of the issued shares of Fusion IP of the same class (excluding any shares of that class held as treasury shares) the restriction notice may in addition direct, inter alia, that any dividend or any part thereof or other money which would otherwise be payable on the Default Shares shall be retained by Fusion IP without liability to pay interest; where Fusion IP has offered the right to elect to receive shares instead of cash in respect of any dividends any election by such member of such restricted shares will not be effective; and no transfer of any of the shares held by the member shall be recognised or registered unless the transfer is a permitted transfer or the member is not himself in default in supplying the information requested and the transfer is part only of the member's holding and is accompanied by a certificate given by the member in a form satisfactory to the Fusion IP Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares which is the subject of the transfer is a restricted share.

5.3 Variation of Class Rights

If at any time the share capital of Fusion IP is divided into different classes of shares, the rights attached to any class of shares may, subject to certain company law acts as defined in the Companies Act (the "Statutes"), be abrogated or varied either with the consent in writing of the holders of threefourths in nominal value of the issued shares of that class (excluding any shares of that class held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of Chapter 3 of part 13 of the Companies Act (save as stated in section 334(2) to (3)) and the provisions of the Fusion IP Articles relating to general meetings shall apply, mutatis mutandis, but so that the necessary quorum at any such meeting other than an adjourned meeting shall be two persons holding or representing by proxy at least one-third in nominal value of the issued shares of the relevant class (excluding any shares of that class held as treasury shares) and at an adjourned meeting one person holding shares of the class or his proxy. Any holder of shares of the relevant class present in person or by proxy may demand a poll upon which every holder of shares of that class shall be entitled to one vote for every such share held by him. The rights attached to any class of shares shall, unless otherwise expressly provided by the terms of issue of such shares of that class or by the terms upon which such shares are for the time being held, be deemed not to be abrogated or varied by the creation or issue of further shares ranking pari passu therewith.

5.4 Alteration of capital

• 5.4.1 Fusion IP may by a resolution authorising it to do so in accordance with the Companies Act consolidate all or any of its share capital into shares of larger nominal amount, sub-divide all or any of its shares into shares of smaller nominal amount.
• 5.4.2 Subject to the provisions of the Statutes, Fusion IP may by special resolution reduce its share capital, any capital redemption reserve, any share premium account and any redenomination reserve in any way.
• 5.4.3 Subject to the provisions of the Statutes, any shares may be allotted on terms that they are redeemed or liable to be redeemed at the option of Fusion IP or the Fusion IP Shareholders on the terms and in the manner provided for by the Fusion IP Articles.
• 5.4.4 Subject to the provisions of the Statutes, Fusion IP may purchase its own shares (including any redeemable shares).

5.5 Transfer of Shares

• 5.5.1 The instrument of transfer of a certificated share shall be signed by or on behalf of the transferor (and, in the case of a share which is not fully paid, by or on behalf of the transferee) and, in relation to the transfer of any share (whether a certificated or an uncertificated share), the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register in respect thereof. All transfers of certificated shares shall be effected by instrument in writing in any usual or common form or any other form which the Fusion IP Directors may approve. The Fusion IP Directors may, in their absolute discretion and without assigning any reason therefore, refuse to register the transfer of a share which is not fully paid (whether certificated or uncertificated) provided that where such shares are admitted to the Official List, such discretion may not be exercised in a way which the FCA or LSE regards as preventing dealings in the shares of the relevant class or classes from taking place on an open and proper basis. The Fusion IP Directors may likewise refuse to register any transfer of a share (whether certificated or uncertificated) in favour of more than four persons jointly. In relation to certificated shares, the Fusion IP Directors may decline to recognise any instrument of transfer unless it is left at the registered office of Fusion IP or such other place as the Fusion IP Directors may determine, accompanied by the relevant certificate and such other evidence as the Fusion IP Directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do), and unless the instrument is in respect of only one class of share.
• 5.5.2 Notwithstanding any other provision of the Fusion IP Articles to the contrary, unless otherwise determined by the Fusion IP Directors, any shares in Fusion IP may be held in uncertificated form and title to shares may be transferred by means of a relevant system (in each case as defined in the Regulations) such as CREST.

5.6 General Meetings

5.6.1 An annual general meeting shall be convened by not less than 21 clear days' notice. All other general meetings shall be called by not less than 14 clear days' notice. The notice shall specify the place, the day and time of meeting and the general nature of that business. A notice calling an annual general meeting shall specify the meeting as such and a notice convening a meeting to pass a special resolution shall specify the intention to propose the resolution as such and shall include the text of the resolution. The accidental omission to give notice of a meeting, or of a resolution intended to be moved at a meeting, or to issue an invitation to appoint a proxy with a notice where required by the Fusion IP Articles, to any person entitled to receive notice, or the non-receipt of notice of a meeting or of such a resolution or of an invitation to appoint a proxy by any such person, shall not invalidate the proceedings at that meeting.

5.7 Fusion IP Directors

• 5.7.1 Unless and until Fusion IP in general meeting shall otherwise determine, the number of Fusion IP Directors shall be not more than ten nor less than two. A Fusion IP Director shall not be required to hold any shares in the capital of Fusion IP. A Fusion IP Director who is not a member shall nevertheless be entitled to receive notice of and attend and speak at all general meetings of Fusion IP and all separate general meetings of the holders of any class of shares in the capital of Fusion IP.
• 5.7.2 No Fusion IP Director shall be disqualified by his office from entering into or being otherwise interested in any contract, arrangement or transaction with Fusion IP or in which Fusion IP has a (direct or indirect) interest. Subject to the provisions of the Statutes and save as therein provided, no such contract, arrangement, transaction or proposal entered into by or on behalf of Fusion IP in which any Fusion IP Director or person connected with him is in any way interested, whether directly or indirectly, shall be liable to be avoided, nor shall any Fusion IP Director who enters into any such contract, arrangement or transaction or who is so interested be liable to account to Fusion IP for any remuneration or other benefit realised by any such contract, arrangement, transaction or interest by reason of such Fusion IP Director holding that office or of the fiduciary relationship thereby established, but such Fusion IP Director shall declare the nature of his interest in accordance with the Statutes.
• 5.7.3 A Fusion IP Director shall (in the absence of some other material interest than is indicated below) be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the following matters, namely:
• (a) the giving of any guarantee, security or indemnity in respect of money lent or obligations incurred by him or by any other person at the request of or for the benefit of Fusion IP or any of its subsidiary undertakings;
• (b) the giving of any guarantee, security or indemnity in respect of a debt or obligation of Fusion IP or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;
• (c) any proposal concerning an offer of securities of or by Fusion IP or any of its subsidiary undertakings in which offer he is, or may be entitled to, participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate;
• (d) any contract, arrangement or transaction concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer or Fusion IP Shareholder or otherwise howsoever, provided that he or any person connected with him do not to his knowledge hold an interest (within the meaning of sections 820 to 825 of the Companies Act) in one per cent. or more of any class of the equity share capital of such body corporate or of the voting rights available to members of the relevant body corporate;
• (e) any contract, arrangement or transaction for the benefit of employees of Fusion IP or any of its subsidiary undertakings which does not accord him any privilege or advantage not generally accorded to the employees to whom the scheme relates;
• (f) any contract, arrangement or transaction concerning any insurance which Fusion IP is to purchase and/or maintain for the benefit of Fusion IP Directors or for the benefit of persons who include Fusion IP Directors;
• (g) the giving of an indemnity pursuant to the Fusion IP Articles; and

• (h) the provision of funds to any Fusion IP Director to meet, or the doing of anything to enable a Fusion IP Director to avoid incurring expenditure of the nature described in section 205(1) or 206 of the Companies Act.

• 5.7.4 If any question shall arise at any meeting as to an interest or as to the entitlement of any Fusion IP Director to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to any other Fusion IP Director other than himself shall be final and conclusive except in a case where the nature or extent of the interests of the Fusion IP Director concerned have not been fairly disclosed.

• 5.7.5 The Fusion IP Board may, subject to the provisions of the Fusion IP Articles, authorise any matter which would otherwise involve a Fusion IP Director breaching his or her duty under the Companies Act to avoid conflicts of interest.
• 5.7.6 Save as provided in the Fusion IP Articles, a Fusion IP Director shall not vote or be counted in the quorum present on any motion in respect of any contract, arrangement or transaction in which he has an interest which is to his knowledge a material interest otherwise than by virtue of his interests in shares or debentures or other securities of, or otherwise in or through Fusion IP. A Fusion IP Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting.
• 5.7.7 Each of the Fusion IP Directors shall be paid a fee at such rate as may from time to time be determined by the Fusion IP Directors, but the aggregate of all such fees so paid to the Fusion IP Directors shall not exceed (excluding amounts payable under any other provision of the Fusion IP Articles) £200,000 per annum or such larger amount as may from time to time be decided by ordinary resolution of Fusion IP. Any Fusion IP Director who is appointed to any executive office or who serves on any committee or who devotes special attention to the business of Fusion IP, or who otherwise performs services which in the opinion of the Fusion IP Directors are outside the scope of the ordinary duties of a Fusion IP Director, may be paid such extra remuneration (whether by way of salary, percentage of profits or otherwise) as the Fusion IP Directors may determine. Each Fusion IP Director may be paid his reasonable travelling, hotel and other expenses properly incurred in attending and returning from meetings of the Fusion IP Directors, or any committee of the Fusion IP Directors or general meeting of Fusion IP or of the holders of any class of shares or debentures of Fusion IP or otherwise in connection with the business of Fusion IP. The Fusion IP Articles do not permit a Fusion IP Director to vote on, or be counted in the quorum in relation to, any resolution of the board concerning his own appointment.
• 5.7.8 There shall be no age limit for Fusion IP Directors.
• 5.7.9 Each Fusion IP Director shall have the power at any time to appoint as an alternate Fusion IP Director either (A) another Fusion IP Director or (B) any other person approved for that purpose by a resolution of the Fusion IP Directors, and, at any time, to terminate such appointment.
• 5.7.10 Each Fusion IP Director shall retire from office at the third annual general meeting after the annual general meeting at which he was last elected. A retiring Fusion IP Director shall be eligible for re-election.
• 5.7.11 The Fusion IP Directors may exercise all the powers of Fusion IP to give or award pensions, annuities, gratuities or other retirement, superannuation, death or disability allowances or benefits to, inter alia, any Fusion IP Directors or ex-directors of Fusion IP or of any subsidiary undertaking or parent undertaking of Fusion IP or to the spouses, civil partners, former spouses, former civil partners, children and other relations and dependants of any such person and may establish, maintain, support, subscribe to and contribute to all kinds of schemes, trusts and funds for the benefit of any such persons.

5.8 Dividends and Distributions on Liquidation to Fusion IP Shareholders

5.8.1 Fusion IP in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Fusion IP Directors. Subject to the Statutes and any priority, preference or special rights, all dividends shall be declared and paid according to the amounts paid up on the shares and shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion of the period in respect of which the dividend is paid.

• 5.8.2 Subject to the provisions of the Statutes, the Fusion IP Directors may pay such interim dividends as they think fit and may pay the fixed dividends payable on any shares of Fusion IP half-yearly or otherwise on fixed dates.
• 5.8.3 The Fusion IP Directors may, with the sanction of an ordinary resolution of Fusion IP in general meeting, offer the holders of Fusion IP Shares the right to elect to receive new Fusion IP Shares credited as fully paid instead of cash in respect of the whole or part of any dividend.
• 5.8.4 Any dividend unclaimed for a period of 12 years after it became due for payment shall be forfeited and shall revert to Fusion IP.
• 5.8.5 On a liquidation, the liquidator may, subject to the Statutes, with the sanction of a special resolution of Fusion IP divide amongst the members in specie or in kind the whole or any part of the assets of Fusion IP (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided and may determine how such division shall be carried out.

5.9 Non-United Kingdom Fusion IP Shareholders

There are no limitations in the Fusion IP Articles on the rights of non-United Kingdom Fusion IP Shareholders to hold, or to exercise voting rights attached to, the Fusion IP Shares. However, non-United Kingdom Fusion IP Shareholders are not entitled to receive notices unless they have given an address in the United Kingdom to which such notices may be sent.

5.10 Borrowing Powers

• 5.10.1 The Fusion IP Directors may, save as the Fusion IP Articles otherwise provide, exercise all the powers of Fusion IP to borrow money and to mortgage or charge its undertaking, property, assets and uncalled capital, or any part thereof, and, subject to the Statutes, to issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of Fusion IP or of any third party.
• 5.10.2 The Fusion IP Directors shall restrict the borrowings of Fusion IP and exercise all voting and other rights or powers of control exercisable by Fusion IP in relation to its subsidiary undertakings (if any) so as to secure (so far, as regards subsidiary undertakings, as by such exercise they can secure) that the aggregate amount for the time being remaining outstanding of all monies borrowed by the Fusion IP Group and for the time being owing to persons outside the Fusion IP Group shall not at any time, without the previous sanction of an ordinary resolution of Fusion IP in general meeting, exceed the greater of:
• (a) £10 million; and
• (b) a sum equal to five times the aggregate of (A) the amount paid up on the issued share capital of Fusion IP and (B) the total of the capital and revenue reserves of the Fusion IP Group (including, without limitation, any share premium account, capital redemption reserve and credit balance on the profit and loss account) in each case, whether or not such amounts are available for distribution, all as shown in the latest audited and consolidated balance sheet of the Fusion IP Group but after such adjustments and deductions (including any amounts attributable to intangibles) as are specified in the relevant Fusion IP Article.

5.11 Forfeiture of shares

• 5.11.1 If the whole or any part of any call or instalment remains unpaid on any share after the due date for payment, the Fusion IP Board may give a notice to the holder requiring him to pay so much of the call or instalment as remains unpaid, together with any accrued interest.
• 5.11.2 If the requirements of a notice are not complied with, any share in respect of which it was given may (before the payment required by the notice is made) be forfeited by a resolution of the Fusion IP Board. The forfeiture shall include all dividends declared and other moneys payable in respect of the forfeited share and not actually paid before the forfeiture.
• 5.11.3 Every share which is forfeited or surrendered shall become the property of Fusion IP and (subject to the applicable statutory provisions) may be sold, re-allotted or otherwise disposed of, upon such terms and in such manner as the Fusion IP Board shall decide either to the person who was before the forfeiture the holder of the share or to any other person and whether with or without all or any part of the amount previously paid up on the share being credited as so paid up.

5.12 Fusion IP Directors' indemnity, insurance and defence

As far as the applicable statutory provisions allow, Fusion IP may:

• 5.12.1 indemnify any Fusion IP Director against any liability;
• 5.12.2 indemnify a Fusion IP Director of a company that is a trustee of an occupational pension scheme for employees (or former employees) of Fusion IP (or of an associated body corporate) against liability incurred in connection with Fusion IP's activities as trustee of the scheme;
• 5.12.3 purchase and maintain insurance against any liability for any Fusion IP Director referred to in (i) or (ii) above; and provide any Fusion IP Director referred to in (i) or (ii) above with funds (whether by loan or otherwise) to meet expenditure incurred or to be incurred by him in connection with any actual or threatened or alleged claims, demands, investigations or proceedings, whether civil, criminal or regulatory or in connection with an application for relief (or to enable any such Fusion IP Director to avoid incurring such expenditure).

6. OTHER RELEVANT LAWS AND REGULATIONS

• 6.1 The City Code applies to the Company. Under the City Code, if an acquisition of the Shares were to increase the aggregate holding of the acquirer and any parties acting in concert with it to Shares carrying 30 per cent. or more of the voting rights in the Company, the acquirer and, depending on the circumstances, its concert parties (if any) would be required (except with the consent of the Panel) to make a cash offer for the Shares not already owned by the acquirer and its concert parties (if any) at a price not less than the highest price paid for the Shares by the acquirer or its concert parties (if any) during the pervious 12 months. A similar obligation to make such a mandatory cash offer would also arise on the acquisition of Shares by a person holding (together with its concert parties, if any) Shares carrying at least 30 per cent. but not more than 50 per cent. of the voting rights in the Company if the effect of such acquisition were to increase the percentage of the aggregate voting rights held by the acquirer and its concert parties (if any).

• 6.2 Under the Companies Act, if a person who has made a general offer to acquire the Shares (the "offeror") were to acquire, or unconditionally contract to acquire, 90 per cent. of the shares to which the offer relates and 90 per cent. of the voting rights attached to the Shares within three months of the last day on which its offer can be accepted, the offeror could then compulsorily acquire the remaining 10 per cent. The offeror would do so by sending a notice to outstanding Shareholders telling them that the offeror will compulsorily acquire their Shares and then, six weeks later, executing a transfer of the outstanding Shares in the offeror's favour and paying the consideration to the Company, which would hold the consideration on trust for outstanding Shareholders. The consideration offered to those Shareholders whose Shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the general offer.

• 6.3 The Companies Act gives minority Shareholders a right to be bought out in certain circumstances by a person who has made a general offer. If a takeover offer related to all the Shares and, at any time before the end of the period within which the general offer can be accepted, the offeror holds or has agreed to acquire not less than 90 per cent. of the shares to which the offer relates, any holder of the Shares to which the general offer relates who has not accepted the general offer can, by a written communication to the offeror, require it to acquire that holder's Shares.

• 6.4 The offeror is required to give each Shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a Shareholder exercises his rights, the offeror is entitled and bound to acquire those Shares on the terms of the offer or on such other terms as may be agreed.
• 6.5 No public takeover bid has been made in relation to the Company during the last financial year or the current financial year.

7. LONG TERM INCENTIVE PLAN

7.1 The Company's Long Term Incentive Plan

The Company operates a Long Term Incentive Plan ("LTIP"), approved by Shareholders at the annual general meeting in 2007 and amended with the approval of Shareholders on 21 June 2011. All employees, including executive directors, of the Group are eligible to participate in the LTIP at the discretion of the Remuneration Committee.

Awards under the LTIP generally take the form of provisional awards of Shares, which vest over the prescribed performance period to the extent that performance conditions have been met. The Remuneration Committee imposes objective conditions on the vesting of awards and these are set taking into consideration the guidance of the Group's institutional investors from time to time.

The 2012 and 2011 LTIP awards will ordinarily vest on 31 March 2015 and 31 March 2014, respectively, to the extent that the performance conditions have been met. The awards are based on the performance of the Group's net asset value, excluding intangible assets and the University of Oxford Equity Rights ("NAV") for the three financial years ending on 31 December immediately prior to the ordinary vesting date of the awards and total shareholder return ("TSR") from the date of the award to the ordinary vesting date. The total award is subject to an underpin based on the relative performance of the Group's TSR to that of the FTSE Small Cap Index, which can reduce the awards by up to 50 per cent. Up to 100 per cent. of the award (prior to the application of the underpin) will vest in full in the event of both NAV increasing by 15 per cent. per year on a cumulative basis over the relevant three-year period and TSR increasing by 15 per cent. per year on a cumulative basis from the date of award to the vesting date, using an industry-standard average price period at the beginning and end of the performance period. Further, 30 per cent. of the award shall vest (again prior to the application of the underpin) if the cumulative increase is 8 per cent. per annum for both measures over their respective performance periods. A straight line sliding scale is applied for performance between the distinct vesting targets.

In April 2013, the Group issued 9,495,195 Shares nominal in order to settle the 2010 LTIP awards which partially achieved their vesting conditions and consequently became due to the Group's employees.

7.2 Fusion IP operates the Fusion IP Long Term Incentive Plan ("LTIP"). The LTIP is a discretionary share plan under which David Baynes, Peter Grant and Stuart Gall have each been granted conditional awards of 1,000,000 Fusion IP Shares, subject generally to continued employment and the satisfaction of an agreed performance condition over a set performance period. Upon the Company obtaining control of Fusion IP, each of the awards will be exchanged so that they are over 446,000 Company Shares reflecting the consideration being given for Fusion IP Shares under the Acquisition (the "Exchange").

No further awards under the LTIP will be granted.

Awards are not assignable or pensionable.

Awards are subject to the satisfaction of a performance condition measured by reference to the growth in Fusion IP's Net Asset Value ("Fusion IP NAV") between the date on which the Company obtains control of Fusion IP and 31 December 2017.

In summary, if there is Fusion IP NAV growth of 10 per cent., 30 per cent. of an award vests. Maximum vesting will occur if Fusion IP NAV growth is at least 20 per cent., with straight line vesting of between 30 per cent. and 100 per cent. if Fusion IP NAV growth is between 10 per cent. and 20 per cent. No part of an award vests if Fusion IP NAV growth is less than 10 per cent.

Subject to the satisfaction of the performance condition, awards will vest following the end of the performance period.

Shares will be transferred to the participant shortly after vesting, subject to withholding for tax and NICs (both employees and employers).

Participants will not be entitled to vote or to receive dividends in respect of the shares the subject of their awards until they have vested and been transferred to the relevant participant as aforementioned. However, the remuneration committee may decide following completion to pay participants a dividend equivalent (in the form of cash or additional shares) on vesting.

Shares transferred under the LTIP will rank pari passu with shares of the same class in issue on the date of transfer except in respect of rights arising by reference to a record date prior to the date on which the participant (or his nominee) is registered as the holder of those shares).

Awards will normally lapse when the participant ceases to hold employment before vesting. However, if employment ends because of death, injury, ill-health, disability, redundancy, the sale of the employing company or business or any other reason as the remuneration committee may in its absolute discretion permit, awards will vest following the end of the performance period, subject to the satisfaction of the performance conditions and subject, at the discretion of the remuneration committee, to any time pro rating to reflect the proportion of the performance period during which the participant was employed.

To the extent Stuart Gall transfers employment to Medaphor Ltd or there is a company initiated termination of any participant's employment other than for a reason justifying summary dismissal, awards will vest following the end of the performance period, subject to the satisfaction of the performance conditions. Unless the remuneration committee decides otherwise, awards will be reduced pro rata to reflect the period of the performance period during which the participant was employed.

As noted above, on the Company acquiring control of Fusion IP, the Exchange will take place so that the awards are instead over such number of Company Shares as shall be calculated by multiplying the number of Fusion IP Shares over which the award subsists by 0.446.

On a subsequent takeover or scheme of arrangement of the Company (not being an internal reorganisation), or other corporate reorganisation, the remuneration committee may determine that awards vest and the extent to which awards vest. The participants may, in the event of a change of control, be allowed to exchange their awards for awards over shares in the acquiring company.

The remuneration committee may make adjustments to the number, nominal value or description of shares subject to an award following any variation in the share capital of the company, provided that the market value of the shares subject to the award immediately before and immediately after the adjustment is substantially the same.

In addition, the remuneration committee may amend the LTIP as it considers appropriate.

The Directors' participations in the Group's LTIP as at 24 January 2014 (the latest practicable date prior to publication of this document) were as follows:

		Share price
	Potential conditional	at date of conditional	Earliest
	interest in Shares	award	vesting date
		(p)
Directors
Alan Aubrey
2011 LTIP	879,654	54	31.03.14
2012 LTIP	302,695 —————	135.5	31.03.15
	1,182,349 —————
Mike Townend
2011 LTIP	670,213	54	31.03.14
2012 LTIP	230,625 —————	135.5	31.03.15
	900,838 —————
Gregory Smith
2011 LTIP	414,894	54	31.03.14
2012 LTIP	142,768 —————	135.5	31.03.15
	557,662 —————
Charles Winward
2011 LTIP	446,809	54	31.03.14
2012 LTIP	153,750 —————	135.5	31.03.15
	600,559 —————
Total	3,241,408
	—————

8. EMPLOYEES

The table below sets out the average number of persons employed by the Group during each of the financial years referred to below. All of the Group's employees are involved in management and administration activities and are based in the UK.

	Average number of persons,
	including executive directors,
Financial year (each ended on 31 December)	employed by the Group
2013	36
2012	34
2011	35

9. CORPORATE GOVERNANCE AND COMMITTEES

The Company is committed to high standards of corporate governance. Corporate governance can be defined as the high level system by which an organisation is directed and controlled to enable it to achieve its business objectives in a manner which is responsible and in accordance with highest standards of integrity, transparency and accountability.

The Group has been in compliance with all relevant requirements of the Combined Code on Corporate, Governance published by the Financial Reporting Council in September 2012.

	Chairman	Members
Nomination Committee	Bruce Smith	Bruce Smith, Francis Carpenter, Mike
		Humphrey and Jonathan Brooks
Remuneration Committee	Francis Carpenter	Francis Carpenter, Mike Humphrey and
		Jonathan Brooks
Audit Committee	Jonathan Brooks	Jonathan Brooks, Francis Carpenter and Mike
		Humphrey

From time to time, separate committees may be set up by the Board to consider specific issues when the need arises. Each of these committees operates under terms of reference which have been established by the Board.

9.1 The Nomination Committee

The Nomination Committee assists the Board in discharging its responsibilities relating to the composition of the Board. The Nomination Committee considers the appointment of both executive and non-executive directors. It also advises the Board on matters generally relating to senior appointments.

9.2 The Remuneration Committee

The Remuneration Committee's objective is to develop remuneration packages for executive directors that enable the Group to attract, retain and motivate executives of the appropriate calibre without paying more than is necessary. No director is involved in deciding his or her own remuneration. The Board's policies on executive remuneration, and the details of executive directors' individual remuneration packages, are fixed by the Remuneration Committee or the Board. It is the Group's policy to take into account the pay and employment conditions of employees throughout the Group when determining directors' remuneration.

9.3 The Audit Committee

The Audit Committee examines and reviews internal controls, together with accounting policies and practices, the form and context of financial reports and statements and general matters raised by the auditor. It reviews the interim financial information and annual accounts before they are submitted to the Board and makes recommendations to the Board in connection with their submission. In addition, the Audit Committee makes recommendations to the Board regarding the appointment of the external auditor, reviews its independence and objectivity and monitors the scope and results of the audit. The Audit Committee is also responsible for agreeing the level of audit fees and monitoring the provision of non-audit services provided by the Group auditor. The Audit Committee assesses the likely impact on the auditor's independence and objectivity before awarding it any material contract for additional services. The Board has identified Jonathan Brooks, a fellow of the Chartered Institute of Management Accountants, as having recent and relevant financial experience. The Board considers that collectively the members have the requisite financial literacy, skills and attributes to enable the Audit Committee to properly discharge its responsibilities.

10. DIRECTORS

Details of the Directors and the Proposed Directors, their business addresses and functions in the Company are set out on page 29 of this document and in paragraphs 10.1 and 10.2 of this Part VII.

10.1 Executive Directors

10.1.1 Alan John Aubrey – Chief Executive Officer

Alan Aubrey (aged 52) co-founded Techtran Group Limited in 2002 and was its CEO when the business was acquired by IP Group in January 2005. Previously, he was a partner in KPMG where he specialised in corporate finance advice to technology based fast growth businesses and has significant experience in helping them raise money and prepare for sale or flotation. Alan joined the Board in January 2005, becoming Chief Executive Officer on 1 January 2006 and has overall responsibility for the operational management of the Group.

10.1.2 Michael Charles Nettleton Townend – Chief Investment Officer

Mike Townend (aged 51) was formerly managing director within the European Equities business of Lehman Brothers with responsibility for equity sales to hedge funds. Mike has over 17 years of experience in all aspects of equity capital markets. Mike was appointed a director of the Company in March 2007.

10.1.3 Gregory Simon Smith – Chief Financial Officer

Greg Smith (aged 35) joined IP Group as Group Financial Controller in January 2008 and was appointed Chief Financial Officer in June 2011. Previously Greg spent three years at Tarchon Capital Management, a multi-billion dollar fund of hedge funds business where he had day to day responsibility for building and managing the operations and accounting team as well as external operational due diligence on investee hedge funds. Prior to Tarchon, Greg spent four years in KPMG's London Financial Services practice working with asset management, insurance and banking clients. Greg is a Chartered Accountant and holds a degree in Mathematics from the University of Warwick.

10.1.4 Charles Stephen Winward – Managing Director, Top Technology

Charles Winward (aged 44) Charles is a CFA charterholder and has an MBA from the University of California at Berkeley. Previously Charles was Vice President Technology Infrastructure at JPMorgan Chase & Co, where he worked in a variety of roles in London, New York and Brussels, and Investment Manager at Axiomlab, an AIM-quoted early stage investment specialist. Charles joined IP Group in April 2007 to manage investments by Top Technology Ventures Limited, the Group's venture capital fund management subsidiary. Charles was appointed as a director in October 2011.

10.1.5 David Graham Baynes – Executive Director

David Baynes (aged 49) will become a director of IP Group with effect from the Effective Date.

Mr Baynes one of the founders of Fusion IP. He was appointed to the Board of Fusion IP on 2 November 2004, having been a director of Fusion IP Trading since 2 January 2003. Mr Baynes has previously worked at: Celsis International plc from its incorporation to its flotation on the full list of the London Stock Exchange in July 1993; Toad plc (now 21st Century Technology PLC), which he co-founded and was responsible for taking the company from start-up to a full listing on the London Stock Exchange in 1995; Whereonearth Limited and Codemasters Limited.

10.2 Non-Executive Directors

10.2.1 Dr Bruce Gordon Smith – Non-executive Chairman

Bruce Smith (aged 74) is chairman of the Council of Smith Institute for Industrial Mathematics and System Engineering. He was the chairman and majority shareholder of Smith System Engineering Limited until 1997. Bruce is a fellow of the Royal Academy of Engineering, the Institute of Engineering and Technology and the Institute of Physics. Bruce became a director of the Company in September 2002 and is also Chairman of the Group's Nomination Committee.

10.2.2 Francis Adam Wakefield Carpenter – Non-executive Director

Francis Carpenter (aged 71) was chief executive officer of the European Investment Fund, holding that role for nearly six years until he stepped down at the end of February 2008. Francis joined the European Investment Bank in 1975 and held a variety of roles including secretary general, director of credit risk management and director of lending in the UK, Ireland, North Sea and Portugal. Francis became a director of the Company in April 2008 and is also Chairman of the Group's Remuneration Committee.

10.2.3 Jonathan Brooks – Non-executive Director

Jonathan Brooks (aged 57) Jonathan was the Chief Financial Officer of ARM Holdings plc from 1995 until 2002 where he was responsible for finance, investor relations, legal, and IT, and where he managed the dual-listed IPO process of ARM on the London Stock Exchange and Nasdaq in 1998. He is a non-executive director of Aveva Group Plc, a provider of engineering data and design IT systems, and Chairman of Nasdaq-listed Xyratex Ltd, a provider of data storage systems. He joined IP Group's board in August 2011 and is also Chairman of the Group's Audit Committee.

10.2.4 Mike Humphrey – Senior Non-executive Director

Mike Humphrey (aged 62) Mike is the former CEO of Croda International plc. He was appointed to the Board of Croda in 1995 and became chief executive of its group at the beginning of 1999. He joined Croda in 1969 as a management trainee and was appointed Managing Director of Croda Singapore in 1988, Croda Application Chemicals in 1990 and Croda Chemicals in 1991. Mike joined IP Group's board in October 2011. He retired from Croda at the end of 2011.

10.2.5 Douglas Brian Liversidge – Non-executive Director

Douglas Liversidge (aged 77) will become a director of IP Group with effect from the Effective Date.

Mr Liversidge was appointed to the Board of Fusion IP on 1 December 2004, having been a director of Fusion IP Trading since 28 November 2003. Mr Liversidge was employed for 21 years at British Steel, before moving to GWThornton Limited as Managing Director and subsequently Chief Executive and guided the company through its flotation on the full list of the London Stock Exchange in March 1987. In 1991 Mr Liversidge was awarded South Yorkshire Businessman of the Year. Mr Liversidge acts as a Senior Industrial Advisor to the University of Sheffield and was awarded the CBE in the 2000 New Year's Honours List for services to industry.

10.3 Directors' and Proposed Directors' Service Agreements and Letters of Appointment

Alan Aubrey has a service contract which commenced on 20 January 2005 and contains a contractual notice period of six months by either party. Mike Townend has a service contract which commenced on 5 March 2007 and contains a contractual notice period of six months by either party. Gregory Smith has a service contract which commenced on 2 June 2011 and contains a contractual notice period of six months by either party. Charles Winward has a service contract with Top Technology Ventures, a subsidiary of the Company, which commenced on 11 October 2011 and contains a contractual notice period of six months by either party. The contracts for executive Directors do not provide any predetermined amounts of compensation in the event of early termination. In the event of early termination, payments for loss of office would be determined by the Remuneration Committee which would take account of the particular circumstances of each case, including the unexpired term of the service contract.

Dr Bruce Smith and Francis Carpenter each have a letter of appointment which commenced on 3 September 2007 and 3 April 2008, respectively. Each appointment is for an initial term of three years, renewable for a further three years. Notwithstanding the aforementioned, in line with the requirements of the UK Corporate Governance Code, each of the non-executive director is put up for annual re-election at each annual general meeting of the Company and appropriate amendments are to be made to the letters of appointment to reflect this. The non-executive Directors' letters of appointment are terminable on three months' notice by either party.

Mike Humphrey and Jonathan Brooks each have a letter of appointment which commenced on 14 October 2011 and 31 August 2011, respectively. Each appointment is for an initial term of three years, renewable for a further three years. Notwithstanding the aforementioned letters of appointment provide that, in line with the requirements of the UK Corporate Governance Code, each of these nonexecutive directors will be put up for annual re-election at each annual general meeting of the Company. The non-executive Directors' letters of appointment are terminable on three months' notice by either party.

Executive Directors may accept other outside non-executive appointments. Where an executive Director accepts an appointment to the board of directors of a company in which the Group is a shareholder, the Group generally retains the related fees. In the limited circumstances where the executive Directors receive such fees directly, such sums are deducted from their base salary. Fees earned for directorships of companies in which the Group does not have a shareholding are normally retained by the Director.

David Baynes will be appointed executive Director with effect from the Effective Date and his service contract, which will commence on the Effective Date, will contain a contractual notice period of six months by either party. The contract does not provide any predetermined amounts of compensation in the event of early termination. In the event of early termination, payments for loss of office would be determined by the Remuneration Committee which would take account of the particular circumstances, including the unexpired term of the service contract.

Douglas Liversidge will be appointed as non-executive Director with effect from the Effective Date and his letter of appointment, which will commence on the Effective Date, provides that his appointment is for an initial term of three years, renewable for a further three years. Notwithstanding the aforementioned letter of appointment further provides that, in line with the requirements of the UK Corporate Governance Code, he will be put up for annual re-election at each annual general meeting of the Company. The letter of appointment is terminable on three months' notice by either party.

Save as referred to in this paragraph 10.3 of this Part VII, there are no service agreements between any Director, Proposed Director and any member of the Group, other than agreements, expiring or determinable by the employing company without payment of compensation (other than statutory compensation) and no such contracts are proposed. There are no benefits payables upon termination of such service agreements.

There is no arrangement under which any Director or Proposed Director has waived, or agreed to waive, future emoluments nor has there been any waiver of emoluments during the financial year immediately preceding the date of this document.

The aggregate remuneration (including salaries, fees, pension contributions, bonus payments and benefits in kind) granted to directors of the Company who served the Group during the financial year ended on 31 December 2012 amounted to £1,198,000, further details of which are provided below:

			Total (exc.		Total (inc.
Base salary	Fees	Benefits*	pension)	Pension	pension)
–	60	–	60	–	60
182	–	5	187	24	211
214	–	4	218	21	239
132	–	2	134	13	147
131	–	3	134	14	148
–	37	–	37	–	37
–	40	–	40	–	40
–	40	–	40	–	40
213	–	5	218	21	239
–	37	–	37	–	37 ————
872	214	19	1,105	93	1,198
	———— ————	———— ————	–——— –———	———— ————	———— ————

• (i) In addition to the above, during the period Alan Aubrey retained fees totalling £58,750 in respect of non executive director services provided to companies in which the Group is a shareholder and which were deducted from the base salary during the year.
• (ii) Dr Alison Fielding resigned as a director of the Group on 30 June 2013. In addition to the above, during the period Dr Alison Fielding retained fees totalling £1,250 in respect of non-executive director services provided to companies in which the Group is a shareholder and which were deducted from the base salary during the year.
• (iii) In addition to the above, during the period Charles Winward retained fees totalling £12,000 in respect of non executive director services provided to companies in which the Group is a shareholder and which were deducted from the base salary during the year.
• * Benefits represent the provision of private medical insurance, travel insurance, life assurance and income protection.

10.4 Directors' shareholdings

As at 24 January 2014 (being the latest practicable date prior to the publication of this document), the interests of the Directors and the Proposed Directors, and (so far as is known to the Directors and Proposed Directors having made appropriate enquiries) of all such persons connected with the directors (which expression shall be construed in accordance with section 252 of the Companies Act), in the issued share capital of the Company are set out in the table below:

	Number of	Percentage of
Name		Shares Existing Shares
Bruce Smith	236,592	0.06
Alan Aubrey	2,237,089	0.60
Michael Townend	910,718	0.24
Gregory Smith	227,685	0.06
Charles Winward	262,446	0.07
David Baynes	None	Nil
Francis Carpenter	239,151	0.06
Jonathan Brooks	60,000	0.02
Mike Humphrey	80,000	0.02
Douglas Liversidge	None	Nil

The Directors and the Proposed Directors are not participating in the Capital Raising. Accordingly, the interests of the Directors and the Proposed Directors in the Enlarged Share Capital of the Company immediately following the completion of the Capital Raising (assuming the size of the Capital Raising is £75 million and is fully subscribed) will therefore be as set out in the table below:

	Number of
	Shares
	following	Percentage
	Capital	of Enlarged
Name	Raising	Share Capital
Bruce Smith	236,592	0.06
Alan Aubrey	2,237,089	0.53
Michael Townend	910,718	0.22
Gregory Smith	227,685	0.05
Charles Winward	262,446	0.06
David Baynes	None	Nil
Francis Carpenter	239,151	0.06
Jonathan Brooks	60,000	0.01
Mike Humphrey	80,000	0.02
Douglas Liversidge	None	Nil

10.5 Directors' current and previous directorships

In addition to being Directors of the Company, the Directors hold or have held the directorships of the companies and/or are or were partners of the partnerships specified opposite their respective names below within the past five years prior to the date of this document.

Director Bruce G. Smith	Current directorships and partnerships Imagineer Systems Limited Imagineer Consulting Limited Industrial Technology Securities Limited Mirriad Limited Oregan Networks Limited Smith Institute	Previous directorships and partnerships Spectrum (General Partner) Limited MDA Space And Robotics Limited ZAC Toons Limited
Alan J. Aubrey	Avacta Group plc Axiomlab Group Limited Axiomlab Investments Limited Biz 2 Bizz Investments Limited Ceres Power Holdings Plc Eureka! The National Children's Museum Inhoco 2835 Limited IP Industry Partners Limited IP2IPO (Europe) Limited IP2IPO Guarantee Limited IP2IPO Limited IP2IPO Management Limited IP2IPO Management II Limited IP2IPO Management IV Limited IP2IPO Management V Limited IP2IPO Management VI Limited IP2IPO Services Limited IP Venture Fund (FP) Limited Partnership IP Venture Fund (GP) Limited IP Ventures (Scotland) Limited Lifeuk (IP2IPO) Limited North East Technology (GP) Limited Oxford Nanopore Technologies Limited Proactis Holdings Plc Proactis Group Limited Techtran Corporate Finance Limited Techtran Group Limited Techtran Investments Limited Techtran Limited Techtran Services Limited The North East Technology (FP) LP The Northern Entrepreneurs Fund LLP Top Technology Ventures Limited TTV IV G.P. Limited	The Northern Entrepreneurs Fund Co-Investment LLP Aquarius Equity Holdings Limited Aquarius Equity Partners Limited Aquarius Northern Entrepreneurs Managing Member Limited Avacta limited Axiomlab Evocutis Plc Flowgroup Plc Hatt III General Partner Limited Modern Biosciences plc Nuage Services Limited Oxford Energy Technologies Limited Scissor Search Limited Syntopix Limited Tissue Regenix Group plc

	Current directorships	Previous directorships
Director	and partnerships	and partnerships
Michael C. N. Townend	Green Urban Transport Limited Evocutis Plc IP2IPO Limited IP Venture Fund (FP) Limited Partnership
	IP Venture Fund (GP) Limited
	Modern Water plc
	Revolymer Plc
	The North East Technology (FP) LP
	Top Technology Ventures Limited
Gregory S. Smith	IP Industry Partners Limited	Modern Waste Limited
	IP2IPO (Europe) Limited	Modern Waste Nominees Limited
	IP2IPO Guarantee Limited
	IP2IPO Limited
	IP2IPO Management Limited
	IP2IPO Management II Limited
	IP2IPO Management III Limited
	IP2IPO Management IV Limited
	IP2IPO Management V Limited
	IP2IPO Management VI Limited
	IP2IPO Management VII Limited
	IP2IPO Management VIII Limited
	IP2IPO Nominees Limited
	IP2IPO Services Limited
	IP Venture Fund (FP) Limited
	Partnership
	IP Venture Fund (GP) Limited
	IP Venture Fund (GP) II LLP
	IP Ventures (Scotland) Limited
	Lifeuk (IP2IPO) Limited
	The North East Technology (FP) LP
	North East Technology (GP)
	Limited Techtran Corporate Finance Limited
	Techtran Group Limited
	Techtran Investments Limited
	Techtran Limited
	Techtran Services Limited
	TTV IV G.P. Limited
Charles S. Winward	7 Lupus Street Management Limited
	IP2IPO Limited
	IP Venture Fund (GP) Limited
	North East Technology (GP) Limited
	Perpetuum Limited
	Plexus Planning Limited
	Retroscreen Virology Group plc
	Salunda Limited
	Top Technology Ventures Limited
	TTV IV G.P. Limited
	Tracsis PLC
	Xeros Limited
	IP Venture Fund II (GP) LLP

Director	Current directorships and partnerships	Previous directorships and partnerships
Francis A. W. Carpenter	Ayers Rock. Lux SARL Bulgarian Development Bank 17 Capital LLP 17 Capital 2 Feeder A Sarl 17 Capital 2 Feeder B Sarl 17 Capital 2 Feeder C Sarl
Jonathan Brooks	Aveva Group Plc Aveva Solutions Limited Xyratex Limited	Clearly So Limited E2V Techonologies Plc Sophos Limited Skrill Holdings Limited Picochip Inc.
Mike Humphrey	Slc Spice Holdings S.A.R.L.	Croda International plc

The Proposed Directors hold or have held the directorships of the companies and/or are or were partners of the partnerships specified opposite their names below within the past five years prior to the date of this document.

	Current directorships	Previous directorships
Director	and partnerships	and partnerships
David Baynes	Absynth Biologics Limited
	Asalus Medical Instruments Limited
	Arthurian Life Sciences Limited
	Biofusion Licensing (Sheffield)
	Limited
	Biohydrogen Limited
	Demasq Limited
	Diurnal Limited
	Fusion IP Cardiff Limited
	Fusion IP One Limited
	Fusion IP Plc
	Fusion IP Sheffield Limited
	Fusion IP Two Limited
	Lifestyle Choices Limited
	Magnomatics Limited
	Mantelum Limited
	Medaphor Limited
	Medella Therapeutics Limited
	Medipex Limited
	Mesuro Limited
	Morvus Technology Limited
	Nick Baynes Property Consulting
	Limited
	Out Of The Blue Consulting
	Limited
	Perlemax Limited
	Phase Focus Limited
	Proflu Limited
	Rheometrix Microsystems Limited
	Wound Genetics Limited
	Wound Genetics Prognostics
	Limited
	Wound Genetics Therapeutics
	Limited

Director	Current directorships and partnerships	Previous directorships and partnerships
Douglas Liversidge	Fusion IP plc
	Fusion IP Sheffield Limited
	Medis Diagnostics Ltd
	Quest Investment Limited
	Surgical Innovations Group plc
	Tool & Steel Products Limited
	U-PAC Containers Limited
	Wakeco (237) Limited

10.6 Miscellaneous

At the date of this document, no Director or Proposed Director has:

• (a) any unspent convictions in relation to fraudulent offences;
• (b) been declared bankrupt or been subject to any individual voluntary arrangement;
• (c) been a director of any company which has been placed in receivership, compulsory liquidation, creditors' voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors whilst he was a director of that company or within 12 months after he ceased to be a director of that company;
• (d) been a partner in any partnership which has been placed in compulsory liquidation, administration or partnership voluntary arrangement whilst he was a partner of that partnership or within 12 months after he ceased to be a partner in that partnership;
• (e) been the owner of any asset or been a partner in any partnership which had an asset placed in receivership whilst he was a partner of that partnership or within the 12 months after he ceased to be a partner of that partnership; or
• (f) been subject to any public criticisms by any statutory or regulatory authorities (including authorised professional bodies) or been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.
• 10.7 There are no outstanding loans granted by any member of the Group to any of the Directors and there are no guarantees provided by any member of the Group for the benefit of any of the Directors.
• 10.8 All of the Directors are directors of, and/or shareholders in, one or more of IP Group's portfolio companies. These directorships and shareholdings potentially give rise to a conflict of interest between the relevant Directors' duties to the Company and their duties to, or interests in, the relevant portfolio company.

For example, if the Group has offered to provide capital to one of its portfolio companies on which one of its Directors sits on the board, that Director owes certain duties to the portfolio company in his or her capacity as a director when that company considers such offer, such as the duty to avoid conflicts of interest, to exercise independent judgement and to promote the success of the company for the benefit of its members as a whole. It may be that in seeking to exercise such duties, this conflicts with the same duties that Director owes to the Company. In such circumstances, the Director will ensure that he declares all such conflicts in accordance with the Companies Act and may be required to abstain from taking part in the discussions and/or voting on any decisions to be taken in respect thereof. In the same way, if a Director is a shareholder in a portfolio company to which the Group is considering providing capital, it may be that his personal interests are potentially in conflict with the duties that Director owes to the Company in considering the merits of the provision of such capital. Again, such Director will fully declare all such conflicts of interest in accordance with the Companies Act and may be required to abstain from taking part in the discussions and/or voting on any decisions to be taken in respect thereof.

10.9 Save as referred to in paragraph 10.8 above, there are no potential conflicts of interest between the Directors' duties to the Company and their private interests and other duties.

11. SIGNIFICANT SHAREHOLDINGS

11.1 As at 24 January 2014 (being the latest practicable date prior to the publication of this document), the Directors were aware of the following persons who, directly or indirectly, were interested in three per cent. or more of the Company's capital or voting rights:

	Percentage of
Name	Existing Shares
IAML	29.5
Lansdowne Partners Limited	15.7
Baillie Gifford & Co	12.1
Sand Aire Limited	8.2
Oppenheimer Funds, Inc	6.0
Legal & General Group plc	5.0

11.2 None of the above persons has voting rights differing from those of any other Shareholder. The Company is not aware that it is directly or indirectly controlled by any person or persons acting in concert. The Company is not controlled directly or indirectly by any Shareholder, nor is it aware of any arrangement which may at a subsequent date result in a change of control of the Company save as expressly provided in this document.

12. WORKING CAPITAL

The Company is of the opinion that the working capital available to it is sufficient for the present requirements of the Group, that is, for at least twelve months from the date of this document.

13. DIVIDENDS

No dividends have been paid by IP Group in respect of the financial years ended 31 December 2012, 31 December 2011 and 31 December 2010.

No dividends have been paid by Fusion IP in respect of the financials years ended on 31 July 2013, 31 July 2012 and 31 July 2011.

14. TAXATION

14.1United Kingdom Taxation

The following statements do not constitute tax advice and are intended as a general guide to certain UK tax considerations only and do not purport to be an analysis of all potential UK tax consequences of subscribing for, holding or disposing of Placing and Open Offer Shares. The following statements are based on current UK legislation and published HM Revenue & Customs practice as at the date of this document, both of which are subject to change at any time, possibly with retrospective effect.

The following statements deal only with the position of Shareholders who are resident (and, in the case of individuals only, ordinarily resident and domiciled) solely in the UK for tax purposes (except where the position of a non-UK tax resident is expressly referred to) and who hold their Existing Shares as an investment and who are the absolute beneficial owners of the Existing Shares and of all dividends of any kind paid in respect of them. The statement are not addressed to: (i) special class of Shareholders such as, for example, dealers in securities, broker-dealers, insurance companies and collective investment schemes; (ii) Shareholders who hold Placing and Open Offer Shares as part of hedging or conversion transactions; and (iii) Shareholders who have (or are deemed to have) acquired their Existing Shares by virtue of a right or opportunity available to them in consequence of an office or employment.

Shareholders who are in any doubt as to their tax position regarding the acquisition, ownership or disposal of their Placing and Open Offer Shares or are subject to tax in a jurisdiction other than the UK, and Shareholders who are not resident for tax purposes in the UK, should consult their own independent tax advisers before taking any action.

14.1.1 Dividends

Under current UK tax legislation, no tax is withheld from dividends paid by the Company.

UK resident individual shareholders are treated as having received income of an amount equal to the sum of the dividend and its associated tax credits, the tax credit for dividends being 10 per cent. of the combined amount of the dividend and the tax credit (i.e. the tax credit will be one ninth of the dividend). The tax credit will effectively satisfy a UK resident individual shareholder's lower and basic rate (but not the higher rates) income tax liability in respect of the dividend. UK resident individual shareholders who are subject to the higher rate of tax at 40 per cent. will have to account for additional tax. The gross rate of tax set for the higher rate. taxpayer who receive dividends is 32.5 per cent. After taking account of the 10 per cent., tax credit, such a tax payer would have to account for additional tax of 22.5 per cent. This additional 22.5 per cent. tax liability equates to an effective rate of income tax on the net cash dividend actually received of 25 per cent. Taxpayers who pay the additional rate of tax of 45 per cent. will also have to account for additional tax. The gross rate of tax set for the additional rate taxpayer who receives dividends is 42.5 per cent. After taking account of the 10 per cent. tax credit, such a taxpayer would have to account for additional tax of 32.5 per cent. This additional 32.5 per cent. tax liability equates to an effective rate of income tax on the cash dividend actually received of 30.6 per cent.

UK tax resident corporate shareholders will not normally be liable to UK corporation tax in respect of any dividend received from the Company.

Whether a shareholder who is not resident in the UK is entitled to a tax credit in respect of dividends paid by the Company will depend, in general, on the terms of any double tax treaty between the UK and their country of residence. A non-UK resident shareholder may also be subject to foreign taxation on dividend income.

Non-UK resident shareholders and shareholders subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser concerning their liabilities to tax on dividends received.

14.1.2 Taxation of Chargeable Gains

Any disposal of Shares by a shareholder resident or ordinarily resident for tax purposes in the UK or a non-UK resident shareholder who carries on a trade, profession or vocation in the UK through a branch or agency and has used, held or acquired the Shares for the purposes of such trade, profession or vocation or such branch or agency may, depending on the shareholder's circumstances, and subject to any available exemptions, allowances or reliefs, give rise to a chargeable gain or an allowable loss for the purposes of UK capital gains tax (or for companies, corporation tax on chargeable gains).

Special rules apply to disposals by individuals at a time when they are temporarily not resident or not ordinarily resident in the UK.

14.1.3 UK Inheritance Tax

The Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax. This is regardless of whether or not the individual holder is domiciled or deemed to be domiciled in the UK and whether or not the holder is resident and/or ordinarily resident in the UK for tax purposes. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply where the donor reserves or retains some interest or benefit in the property being transferred.

If an individual is resident in the UK but not domiciled in the UK, professional advice should be sought.

Special rules apply to trustees of settlements who hold Shares bringing them within the charge to UK inheritance tax.

14.1.4 Stamp Duty and Stamp Duty Reserve Tax ("SDRT")

Any transfer or sale of Shares will generally give rise to a liability on the purchaser to ad valorem stamp duty currently at a rate equivalent to 50p for every £100 or part of £100 of the consideration paid. An unconditional agreement to transfer such Shares will be subject to SDRT at a rate of 0.5 per cent, of the amount or value of the consideration. However, when an instrument of transfer is executed and duly stamped before the expiry of a period of six years beginning with the date of that agreement, a claim can normally be made to cancel or obtain repayment of the SDRT liability. Special rules apply to the agreements made by market makers in the ordinary course of their business, brokerdealers and certain other persons. Agreements relating to the transfer of Shares to charities will not give rise to SDRT or stamp duty.

The information in this paragraph is intended as a general summary of certain elements of the UK tax position and should not be construed as constituting advice. Potential investors should obtain advice from their own investment or taxation adviser.

14.2 United States Taxation

United States Federal Income Taxation

The following discussion is a general summary under present law of certain US federal income tax considerations relevant to the acquisition, ownership and disposition of the New Shares. The summary is not a complete description of all tax considerations that may be relevant. It applies only to US Holders (as defined below) that acquire New Shares in this Capital Raising, hold the New Shares as capital assets and use the US dollar as their functional currency. It does not address the tax treatment of persons subject to special rules, such as financial institutions, dealers or traders, insurance companies, tax exempt entities, persons owning 10 per cent. or more of the Company's share capital, persons holding New Shares as part of a hedge, straddle, conversion or constructive sale transaction or persons holding New Shares in connection with a permanent establishment in the United Kingdom. It also does not address US state and local tax considerations.

THE STATEMENTS ABOUT US FEDERAL TAX CONSIDERATIONS ARE MADE TO SUPPORT MARKETING OF THE PLACING AND OPEN OFFER SHARES. NO TAXPAYER CAN RELY ON THEM TO AVOID US FEDERAL TAX PENALTIES. EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE FROM AN INDEPENDENT TAX ADVISOR ABOUT THE TAX CONSEQUENCES UNDER ITS OWN PARTICULAR CIRCUMSTANCES OF INVESTING IN THE PLACING AND OPEN OFFER SHARES UNDER THE LAWS OF THE UNITED KINGDOM, THE UNITED STATES AND ITS CONSTITUENT JURISDICTIONS, AND ANY OTHER JURISDICTIONS WHERE THE PURCHASER MAY BE SUBJECT TO TAXATION.

As used in this section, "US Holder" means a beneficial owner of New Shares that for US federal income tax purposes, is (i) a US citizen or individual resident of the United States, (ii) a corporation or other business entity treated as a corporation created or organized under the laws of the United States or its political subdivisions, (iii) a trust subject to the control of a US person and the primary supervision of a US court or (iv) an estate the income of which is subject to US federal income tax without regard to its source. The US federal income tax treatment of a partner in a partnership of the New Shares generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership that holds New Shares should consult their own tax advisors regarding the specific US federal income tax consequences to them in respect of the acquisition, ownership and disposition of the New Shares by the partnership.

Tax Basis

A US Holder's basis in the New Shares will be the US dollar value of the purchase price. US Holders should consult their own tax advisers regarding the rules applicable to the acquisition of New Shares in a currency other than the US dollar.

Passive Foreign Investment Company

In general, the Company will be considered a passive foreign investment company ("PFIC") for any taxable year in which: (i) 75 per cent. or more of its gross income consists of passive income; or (ii) 50 per cent. or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, if the Company, directly or indirectly, owns at least 25 per cent. by value of the stock of another corporation, then the Company would be treated as if it held its proportionate share of the assets of such other corporation and received directly its proportionate share of the income of such other corporation. Passive income generally includes dividends, interest, rents, royalties and capital gains. The Company may meet the PFIC income and/or asset tests for the current year. In addition, the Company may make acquisitions of equity interests in PFICs, referred to herein as "Lower-tier PFICs" and there is no guarantee that the Company would cease to be a PFIC once it has made these acquisitions. Consequently, the Company can provide no assurance that it will not be a PFIC for either the current year or for any subsequent year.

Under certain attribution rules, if the Company is a PFIC, US Holders will be deemed to own their proportionate share of Lower-tier PFICs, and will be subject to US federal income tax on: (i) certain distributions on the shares of a Lower-tier PFIC; and (ii) a disposition of shares of a Lower-tier PFIC, both as if the holder directly held the shares of such Lower-tier PFIC. If the Company is a PFIC for any taxable year during which a US Holder holds (or, as discussed in the previous paragraph, is deemed to hold) its New Shares, such US Holder will be subject to significant adverse US federal income tax rules. Unless a holder makes a timely "QEF Election" or "mark-to-market" election, each as described below, gain recognised upon a disposition (including, under certain circumstances, a pledge) of New Shares by such US Holder, or upon an indirect disposition of shares of a Lower-tier PFIC, will be allocated rateably over the US Holder's holding period for such shares and will not be treated as capital gain. Instead, the amounts allocated to the taxable year of disposition and to the years before the relevant company became a PFIC, if any, will be taxed as ordinary income. The amount allocated to each PFIC taxable year will be subject to tax at the highest rate in effect for such taxable year for individuals or corporations, as appropriate, and an interest charge (at the rate generally applicable to underpayments of tax due in such year) will be imposed on the tax attributable to such allocated amounts. Any loss recognised will be capital loss, the deductibility of which is subject to limitations. Further, to the extent that any distribution received by a US Holder on its New Shares (or a distribution by a Lower-tier PFIC to its shareholder that is deemed to be received by a US Holder) exceeds 125 per cent. of the average of the annual distributions on such shares received during the preceding three years or the US Holder's holding period, whichever is shorter, such excess distribution will be subject to taxation as described above.

If the Company is a PFIC for any taxable year during which a US Holder holds New Shares, the Company will continue to be treated as a PFIC with respect to the US Holder for all succeeding years during which the US Holder holds New Shares, regardless of whether the Company actually continues to be a PFIC. The US Holder may terminate this deemed PFIC status by electing to recognise gain (which will be taxed under the adverse tax rules discussed in the preceding paragraph) as if the US Holder's New Shares had been sold on the last day of the last taxable year for which the Company was a PFIC.

Qualified Electing Fund Election ("QEF Election")

A US Holder may be able to make timely elections to treat the Company and any Lower-tier PFICs controlled by the Company as qualified electing funds ("QEF Elections") to avoid the foregoing rules with respect to excess distributions on and dispositions of New Shares. If a US Holder makes a QEF Election, the US Holder would be currently taxable on its pro rata share of the Company's ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year for which the Company is classified as a PFIC, regardless of whether the US Holder received any dividend distributions from the Company. To the extent of such income inclusions, the US Holder would not be required to include in income any subsequent dividend distributions received from the Company. For purposes of determining a gain or loss on the disposition (including redemption or retirement) of New Shares, the US Holder's initial tax basis in the New Shares (as discussed above under "— Tax Basis") would be increased by the amount included in gross income as a result of a QEF Election and decreased by the amount of any nontaxable distributions on the New Shares. In general, a US Holder making a timely QEF Election will recognise, on the sale or disposition (including redemption and retirement) of New Shares, capital gain or loss equal to the difference, if any, between the amount realised upon such sale or disposition and that US Holder's adjusted tax basis in those New Shares. Such gain will be longterm if the US Holder has held the New Shares for more than one year on the date of disposition. Similar rules will apply to any Lower-tier PFICs for which QEF Elections are timely made. Certain distributions on, and gain from dispositions of, equity interests in Lower-tier PFICs for which no QEF Election is made will be subject to the general PFIC rules described above.

Each US Holder who desires to make QEF Elections must individually make QEF Elections with respect to each entity. Each QEF Election is effective for the US Holder's taxable year for which it is made and all subsequent taxable years and may not be revoked without the consent of the IRS. In general, a US Holder must make a QEF Election on or before the due date for filing its income tax return for the first year to which the QEF Election is to apply. If a US Holder makes a QEF Election in a year following the first taxable year during such US Holder's holding period in which a company is classified as a PFIC, the general PFIC rules described above will continue to apply unless the US Holder elects to recognise gain as if the US Holder has sold shares in the Company or Lower-tier PFIC for their fair market value on the first day of the US Holder's taxable year for which the US Holder makes the QEF Election with respect to the Company or Lower-tier PFIC. Any gain recognised on this deemed sale would be subject to the general PFIC rules described above. In order to comply with the requirements of a QEF Election, a US Holder must receive certain information from the Company. If the Company receives any requests to provide such information, it will consider all facts and circumstances (including the cost of providing such information) in determining whether it is in the best interests of the Company and the investors to provide such information. If the Company elects to provide such information, such information would be provided as promptly as practicable, upon the request of registered holders of New Shares with US addresses and other Shareholders, following the end of the Company's initial taxable year and any other taxable year in which the Company and any Lower-tier PFIC determines that it is a PFIC. There is no assurance, however, that the Company will have timely knowledge of its status as a PFIC, that it will be able to obtain the required information from any Lower-tier PFICs, or that the information that the Company provides will be adequate to allow US Holders to make a QEF Election. US Holders should consult with their own tax advisers as to the advisability of, consequences of, and procedures for making, a QEF Election.

Neither investors nor the Company will be able to determine whether the Company will be a PFIC for its initial taxable year until after the close of the Company's 2013 taxable year since it cannot be certain that it will qualify for the start-up year exception described above under "—Passive Foreign Investment Company". If the Company were to determine that it did not qualify for the start-up year exception after the due date of a US Holder's tax return for the Company's current taxable year, a US Holder would not be able to make a retroactive QEF Election with respect to such first taxable year unless (i) the US Holder obtains the consent of the IRS to file a late QEF Election with respect to such year or (ii) the US Holder (a) reasonably believed, as of the original due date for making the QEF Election, that the Company was not a PFIC for its first taxable year (i.e., the retroactive election year) and (b) filed a protective statement with respect to the Company with such holder's tax return for the retroactive election year in which the holder described the basis for its reasonable belief and agreed to extend the period of limitations on the assessment of taxes under the PFIC rules for the retroactive election year. In the alternative, if the Company were to determine that it did not qualify for the startup year exception after the due date of a US Holder's tax return for the Company's current taxable year, a US Holder could make a deemed sale election described above under "—Qualified Electing Fund Elections ("QEF Election")" with respect to such holder's Ordinary Shares as of the last day of the Company's current taxable year and a QEF Election for the Company's 2013 taxable year. There can be no assurance, however, that the Company will have timely knowledge of its status as a PFIC, or that the information that the Company provides will be adequate to allow US Holders to make a QEF Election. US Holders should consult their own tax advisers as to the advisability of, consequences of, and procedures for making, a timely or retroactive QEF Election, a deemed sale election, or both.

The rules dealing with PFICs, QEF Elections, deemed sale elections and mark-to-market elections are complex and affected by various factors in addition to those described above. As a result, US Holders should consult their own tax advisers concerning the Company's PFIC status and the tax considerations relevant to an investment in a PFIC including the availability of and the merits of making QEF Elections (including the timing thereof), deemed sale elections, or mark-to-market elections.

Mark-to-Market Election

Alternatively, a US Holder may be able to make a mark-to-market election with respect to the New Shares (but not with respect to the shares of any Lower-tier PFICs) if the New Shares are "regularly traded" on a "qualified exchange". In general, the New Shares will be treated as "regularly traded" in any calendar year in which more than a de minimis quantity of Ordinary Shares are traded on a qualified exchange on at least 15 days during each calendar quarter. The Company believes the London Stock Exchange is a qualified exchange. However, the Company can make no assurance that the New Shares will be listed on a "qualified exchange" or that there will be sufficient trading activity for the New Shares to be treated as "regularly traded". Accordingly, US Holders should consult their own tax advisers as to whether the Ordinary Shares would qualify for the mark-to-market election.

If a US Holder makes the mark-to-market election, for each year in which the Company is a PFIC, the holder will generally include as ordinary income the excess, if any, of the fair market value of the New Shares at the end of the taxable year over their adjusted tax basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted tax basis of the New Shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). If a US Holder makes the election, the holder's tax basis in the New Shares will be adjusted to reflect any such income or loss amounts. Any gain recognised on the sale or other disposition of New Shares will be treated as ordinary income.

A mark-to-market election applies to the taxable year in which the election is made and to each subsequent year, unless the New Shares cease to be marketable (as described above) or the IRS consents to the revocation of the election. If a mark-to-market election is not made for the first year in which a US Holder owns New Shares and the Company is a PFIC, the interest charge described above will apply to any mark-to-market gain recognised in the later year that the election is first made.

A mark-to-market election under the PFIC rules with respect to the New Shares would not apply to a Lower-tier PFIC, and a US Holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in any Lower-tier PFIC. Consequently, US Holders of New Shares could be subject to the PFIC rules with respect to income of any Lower-tier PFIC. US Holders should consult their own tax advisers regarding the availability and advisability of making a mark-tomarket election in their particular circumstances. In particular, US Holders should consider the impact of a mark-to-market election with respect to their Ordinary Shares, given that the Company does not expect to pay regular dividends, at least in the short to medium term, and given that the Company may have Lower-tier PFICs for which such election is not available.

Consequences of Not Being a PFIC – Dividends

If the Company is not treated as a PFIC, dividends on the New Shares (including the amount of tax withheld, if any) should be included in a US Holder's gross income as ordinary income from foreign sources when actually or constructively received. Dividends will not be eligible for the dividendsreceived deduction generally available to US corporations. Dividends received by eligible noncorporate US holders in tax years beginning before January 1, 2014, however, might be taxable at the preferential rate allowed for qualified dividend income if the Company were eligible for the benefits of the income tax treaty between the United States and the United Kingdom and the US Holder met applicable holding period requirements. A US Holder will not be eligible for this preferential rate if the Company is treated as a PFIC in the taxable year in which the distribution is received or in the preceding taxable year.

Dividends paid in a currency other than US dollars will be includable in income in a US dollar amount based on the exchange rate in effect on the date of receipt whether or not the payment is converted into US dollars at that time. A US holder's tax basis in the non-US currency will equal the US dollar amount included in income. Any gain or loss on a subsequent conversion of the non-US currency into US dollars for a different amount generally will be US source ordinary income or loss and will not be treated as a dividend.

Subject to generally applicable limitations, US Holders may claim a deduction or a foreign tax credit for non-US tax withheld at the appropriate rate. In computing a non-corporate US Holder's foreign tax credit limitation, only a portion of any dividend taxed at the reduced rate for qualified dividend income will be treated as income from foreign sources. For tax years beginning after December 31, 2012, dividends received by certain individuals may constitute "net investment income" subject to additional tax.

Consequences of Not Being a PFIC – Dispositions

If the Company is not treated as a PFIC, a US Holder will recognize capital gain or loss on the sale or other disposition of New Shares in an amount equal to the difference between the US Holder's adjusted tax basis in the New Shares (as discussed above under "— Tax Basis") and the US dollar value of the amount realised from the disposition. Any gain or loss generally will be treated as arising from US sources. It will be long-term capital gain or loss if the holder has held New Shares for more than one year. Regardless of a US Holder's holding period, however, any loss may be long-term capital loss to the extent the US Holder has received a dividend qualified for the reduced tax rate discussed above that, when aggregated with other dividends in the same consecutive 85 day period, exceeds 10 per cent. of the US Holder's basis in its New Shares. Deductions for capital losses are subject to significant limitations.

A US Holder that receives a currency other than US dollars on the disposition of New Shares will realize an amount equal to the US dollar value of the currency received at the spot rate on the date of sale (or, in the case of cash basis and electing accrual basis US Holders, the settlement date). An accrual basis US Holder that does not elect to determine the amount realized using the spot rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the US dollar value of the amount received based on the spot exchange rates in effect on the date of sale or other disposition and the settlement date. A US Holder will have a tax basis in the currency received equal to the US dollar value of the currency received on the settlement date. Any gain or loss on a subsequent disposition or conversion of the currency will be US source ordinary income or loss.

For tax years beginning after December 31, 2013, gain on the disposition of the New Shares by certain individuals may constitute "net investment income" subject to additional tax.

Information reporting and backup withholding

Under US federal income tax laws, certain categories of US Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation (including IRS Forms 926). Penalties for failure to file certain of these information returns are severe. For any year in which the Company is a PFIC, each US Holder will be required to file an information statement regarding such US Holder's ownership interest in the Company. In addition, under current law, if a US Holder makes a QEF or mark-to-market election, such US Holder must attach a completed IRS Form 8621 to a timely filed (including extensions) US federal income tax return. US Holders of New Shares should consult with their own tax advisers regarding the requirements of filing information returns and QEF and mark-to-market elections.

Dividends on and proceeds from the sale or other disposition of the New Shares may be reported to the IRS unless the holder is a corporation or otherwise establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting if the holder fails to provide an accurate taxpayer identification number or otherwise establish a basis for exemption. A US Holder can claim a credit against its US federal income tax liability for amounts withheld under the backup withholding rules, and can claim a refund of amounts in excess of its tax liability by providing the appropriate information to the IRS.

Recently enacted legislation requires certain US Holders to report information with respect to investments in the New Shares not held through an account with a financial institution to the IRS. Investors who fail to report required information could become subject to substantial penalties. Potential investors are encouraged to consult with their own tax advisors about these and any other reporting obligations arising from their investment in the New Shares.

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN THE PLACING AND OPEN OFFER SHARES IN LIGHT OF THE INVESTOR'S OWN CIRCUMSTANCES.

14.3 Certain ERISA Considerations

The U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") and Internal Revenue Code of 1986, as amended (the "Code") impose restrictions on employee benefit plans and other investors that are subject to ERISA and/or Section 4975 of the Code (collectively "Plans"), and on persons that are parties in interest (including parties in interest under Section 406 of ERISA and disqualified persons under Section 4975 of the Code) with respect to such Plans. ERISA, the Code, and rules and regulations of the U.S. Department of Labor (the "DOL") promulgated thereunder contain provisions that should be considered by fiduciaries of those Plans and their legal advisers.

Plan Assets

DOL regulations address whether an equity investment by a Plan in an entity will result in the assets of the entity being deemed "plan assets." Those regulations contain a general rule that if the interest acquired by the Plan is neither regulated by the U.S. Securities and Exchange Commission nor a security issued by an investment company that is registered under the U.S. Investment Company Act of 1940, the Plan's assets include both the equity interest in the entity and an undivided interest in the entity's underlying assets, unless (i) the entity qualifies as an "operating company," which includes a "venture capital operating company" (as described more fully below), or (ii) the aggregate equity participation in each class of equity in the Company by "benefit plan investors" (as defined in Section 3(42) of ERISA) is less than 25% of the total value of such class of equity securities in the Company.

An entity is a venture capital operating company ("VCOC") if: (i) on its "initial valuation date" and on at least one day within each "annual valuation period," at least 50% of the entity's assets, valued at cost (other than short-term investments pending long-term commitment or distribution to investors), are invested in operating companies (other than VCOCs) as to which the entity has or obtains "management rights" or derivative investments (i.e., venture capital investments that have ceased to be such by reason of the occurrence of certain public offerings, or exchanges, of the entity's securities) and (ii) the entity, in the ordinary course of its business, actually exercises such "management rights" at least annually with respect to one or more of the operating companies in which it invests. "Management rights" are direct contractual rights between the investor and the portfolio operating company to substantially participate in, or substantially influence the conduct of, the management of the operating company. The term "initial valuation date" is the date on which an entity first makes an investment that is not a short-term investment of funds pending long-term commitment. An entity's "annual valuation period" is a pre-established period not exceeding 90 days in duration, which begins no later than the first anniversary of the entity's initial valuation date.

The term "benefit plan investor" includes (a) any employee benefit plan (as defined in Section 3(3) of ERISA) subject to the provisions of Title I of ERISA, (b) any Plan subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the "Code") and (c) any entity whose underlying assets include plan assets by reason of a Plan's investment in the entity. For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the Fund or that provides investment advice for a fee (direct or indirect) with respect to such assets (or any affiliate of such person) is disregarded.

The Company believes that it qualifies as a VCOC and expects to continue to qualify as a VCOC. Accordingly, the Company expects that if a Plan invests in the Company, the assets of the Company (including the Company's investment in the portfolio companies) will not be plan assets for purposes of ERISA or the Code. However, we cannot predict in advance, nor can there be any continuing assurance, that the VCOC exception will apply, because of the factual nature of the analysis required by the DOL's regulations.

If the Company does not qualify as a VCOC (or ceases to qualify as a VCOC), and benefit plan investors own 25 per cent. or more of any class of equity in the Company, assets of the Company may be deemed to be plan assets, and ERISA's prohibited transaction rules may restrict certain transactions of the Company. There is no guarantee that an exemption from such prohibited transaction rules will be available.

Fiduciary Duty

In deciding upon an investment in the Company, ERISA plan fiduciaries should consider their basic fiduciary duties under ERISA Section 404, which require them to discharge their investment duties prudently and solely in the interests of the plan participants and beneficiaries. Plan fiduciaries must give appropriate consideration to the role that an investment in the Company would play in the plan's overall investment portfolio. In analyzing the prudence of an investment in the Company, special attention should be given to the DOL's regulation on investment duties (29 C.F.R. § 2550.404a-1). That regulation requires, among other things (i) a determination that each investment is designed reasonably, as part of the portfolio, to further the plan's purposes, (ii) an examination of risk and return factors and (iii) consideration of the Company composition with regard to diversification, the liquidity of the investment relative to anticipated cash flow needs of the plan, and the projected return of the investment relative to the plan's funding objectives. ERISA also requires a fiduciary to discharge such duties in accordance with the documents governing the plan insofar as they are consistent with ERISA.

Fiduciaries that are considering an investment in the Company should also consider the applicability of the prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment and confirm that such investment will not constitute or result in a prohibited transaction (e.g., by reason of the Company being a VCOC) or any other violation of an applicable requirement of ERISA.

Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any Interests.

The sale of New Shares to a Plan is in no respect a representation or warranty that the investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan. Prospective investors such as pension funds and individual retirement accounts that are subject to the provisions of ERISA or the Code should consult with their counsel and advisers as to the provisions of ERISA and the Code that apply to an investment in the Company.

15. IP GROUP MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of IP Group within the two years immediately preceding the date of this document and/or have been entered into by members of the Group and contain provision under which any member of the Group has any obligation or entitlement which is material to the Group as at the date of this document:

15.1 Summary of the agreements relating to the University of Oxford Partnership

15.1.1 Equity Agreement

Pursuant to an equity agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Equity Supplemental Agreement")) made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO Limited, (3) the University of Oxford and (4) ISIS Innovations Limited ("ISIS"), the University of Oxford granted IP2IPO Limited (in consideration of the sum of £10,000 paid by IP2IPO Limited to the University of Oxford) the right to purchase (subject to certain exceptions) 50 per cent. of the share capital issued to the University of Oxford in companies (each a "University of Oxford Spin-Out Company") where some or all of the founding shareholders are members of the University of Oxford's Department of Chemistry ("OUCD"). The equity agreement was varied by the Equity Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory.

The term of the equity agreement (as amended) is 15 years from 23 November 2000 but the term may be determined earlier with the agreement of the parties or if: (i) IP2IPO Limited becomes insolvent; (ii) the Company or IP2IPO Limited commits any material breach of the equity agreement (not being capable of remedy); or (iii) the Company or IP2IPO Limited fails to remedy any material remediable breach after a cure period.

IP2IPO Limited's right to purchase a 50 per cent. interest in each University of Oxford Spin-Out Company arises upon the earliest of: (i) the date on which the first investor (other than the founder researchers) and the University of Oxford subscribe for shares in the University of Oxford Spin-Out Company; (ii) the date falling three months after shares in the University of Oxford Spin-Out Company have been allotted to the founder researchers; and (iii) the date an agreement is entered into for the sale of the whole of the issued share capital of that University of Oxford Spin-Out Company or for the sale of the whole or substantially the whole of the assets and/or business of that University of Oxford Spin-Out Company.

The price to be paid by IP2IPO Limited in consideration for 50 per cent. of the University of Oxford's shares in a University of Oxford Spin-Out Company is: (i) the fair value of the shares (as agreed or certified by the auditors of the University of Oxford Spin-Out Company); or (ii) if the purchase is taking place at the same time as an investor is subscribing for shares in that University of Oxford Spin-Out Company, a price not materially different from the price paid by that investor taking into account the rights attaching to the shares being subscribed for by that investor and the shares being purchased by IP2IPO Limited. However, once IP2IPO Limited has paid, in aggregate, a sum equal to £19,890,000 for shares in University of Oxford Spin Out Companies, then the purchase price to be paid for further purchases of shares in University of Oxford Spin-Out Companies shall be the par value of such shares.

The equity agreement establishes a procedural framework for the exploitation of IP arising within the OUCD. IP2IPO Limited's involvement includes assisting ISIS in the identification of exploitable IP within the OUCD, the evaluation of all projects established by ISIS and, where appropriate, the production of an investment proposal in respect of any exploitable IP. The parties agreed to establish a steering committee (consisting of three representatives from the Company and IP2IPO Limited, two representatives from the University of Oxford and one representative from ISIS). The steering committee is empowered to review progress in the exploitation of the relevant IP and the effectiveness of the framework and procedures which the parties have adopted for exploitation purposes and to advise the University of Oxford and ISIS on the processes of achieving exploitation. The quorum of the steering committee is two representatives of the Company and IP2IPO Limited and two representatives from the University of Oxford and ISIS. Administration of the steering committee is provided by IP2IPO Limited and one of the representatives appointed by IP2IPO Limited normally acts as chairman of the steering committee. The chairman does not have a casting vote. To the extent that the steering committee is unable to agree on any matter before it, the matter is referred to the Registrar of the University of Oxford and the chief executive of the Company.

The Company guarantees to the University of Oxford the due performance by IP2IPO Limited of its obligations under the equity agreement.

15.1.2 Revenue Sharing Agreement

Pursuant to a revenue sharing agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Revenue Supplemental Agreement")) and made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO Limited and (3) ISIS, ISIS (in consideration of the sum of £100,000 paid by IP2IPO Limited to ISIS) agreed to pay to IP2IPO Limited a sum equal to 50 per cent. of the net revenue derived from the exploitation by ISIS of IP rights in work done (in whole or in part) by members of the OUCD through the grant of licences or in other ways that would otherwise be for distribution to elements of the University of Oxford as set out in the University of Oxford's Statutes, Decrees and Regulations from time to time. The revenue sharing agreement was varied by the Revenue Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory Limited.

The term of the revenue sharing agreement (as amended) is fifteen years from 23 November 2000 but the term may be determined earlier with the agreement of the parties to the revenue sharing agreement or if: (i) IP2IPO Limited becomes insolvent; (ii) the Company or IP2IPO Limited shall commit any material breach of the agreement (not being capable of remedy); or (iii) the Company or IP2IPO Limited fails to remedy any material remediable breach of the agreement after a cure period.

The Company guarantees to ISIS the due performance by IP2IPO Limited of its obligations under the revenue sharing agreement.

15.1.3 Loan Agreement

Pursuant to a loan agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Loan Supplemental Agreement")) and made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO Limited and (3) the University of Oxford, IP2IPO Limited agreed to make an interest free loan of £19,890,000 (the "Loan") available to the University of Oxford. The Loan was paid to the University of Oxford in two tranches, both of which tranches have been paid in full. The loan agreement (as amended) provides that sums due by IP2IPO Limited to the University of Oxford in respect of the purchase by IP2IPO Limited of shares from the University of Oxford in any University of Oxford Spin-Out Company will be offset against, and will be applied in the reduction of, the outstanding balance of the Loan. To the extent that there is any balance of the Loan outstanding as at 31 March 2016, then such outstanding balance will be written off and all amounts due from the University of Oxford to IP2IPO Limited in respect of the Loan will be deemed to have been discharged on that date. The loan agreement was varied by the Loan Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory Limited.

The Company guarantees to the University of Oxford the due performance by IP2IPO Limited of its obligations under the loan agreement.

15.2 Summary of the agreements relating to the University of Southampton Partnership

15.2.1 Framework Agreement

Pursuant to a framework agreement dated 20 March 2002 and made between (1) the University of Southampton, (2) University of Southampton Holdings Limited, a wholly owned subsidiary of the University of Southampton ("USHL"), (3) IP2IPO Limited, (4) IML and (5) Southampton Asset Management Limited ("SAM"), the parties agreed certain arrangements with regard to the commercialisation of IP created by the University of Southampton's academic staff, students and third parties which vests in the University of Southampton ("University of Southampton IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 20 per cent. interest in SAM (which holds the University of Southampton's interest in any company established with a view to the commercialisation of University of Southampton IP (each a "University of Southampton Spin-Out Company")), a 20 per cent. interest in the University of Southampton's interest in shares acquired as a result of the University's licensing activities (other than Out-Licensing as defined in sub-paragraph (iv) below) and an interest, through IML, in investments from the £5m Southampton Fund in University of Southampton Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

• (i) IP2IPO Limited will make the £5m Southampton Fund available to IML so as to enable IML to make seed capital investments in University of Southampton Spin-Out Companies made in accordance with the investment protocol set out in the framework agreement and in companies formed to commercialise University of Southampton IP which is partially owned by the University of Southampton and partially owned by third parties;
• (ii) that the University of Southampton IP policy and certain other contracts grant the University of Southampton ownership of University of Southampton IP and that the University of Southampton has agreed that it will not amend the IP policy (other than by reason of any change of law) with the objective of materially diminishing any interest which IP2IPO Limited may have in University of Southampton Spin-Out Companies;
• (iii) subject to the provisions of sub-paragraph (iv) below, the University of Southampton will use all reasonable endeavours and act in good faith to procure that during the term of the framework agreement all commercialisation opportunities relating to the creation of University of Southampton Spin-Out Companies will be channelled through SAM. As from the date of the framework agreement, SAM owns outright the equity in University of Southampton Spin Out Companies corresponding to the University of Southampton's interest in that company;
• (iv) whilst generally University of Southampton IP will be commercialised by the University of Southampton licensing or assigning the relevant IP to a University of Southampton Spin-Out Company, in some instances greater benefit may be derived by the University of Southampton licensing the relevant University of Southampton IP to a company which may be regarded as "established" (i.e. it is not "early stage" or "developmental") in return for cash or deferred cash consideration ("Out-Licensing"). Under the framework agreement the parties acknowledge that IP2IPO Limited has a vested interest in the creation of University of Southampton Spin-Out Companies but no such interest in Out Licensing and they agree, that, where such alternative commercialisation routes present themselves the presumption as between the parties is that the preferred route is the formation of a University of Southampton Spin-Out

Company where the arguments in favour of such formation outweigh the arguments in favour of Out-Licensing. However, subject to the University of Southampton acting in good faith and giving due consideration to the views of the steering committee (as referred to in sub-paragraph (x) below), the University of Southampton's decision with respect to the selection of the preferred commercialisation route is final;

• (v) investment decisions in relation to University of Southampton Spin-Out Companies will be made by the investment committee (other than in relation to certain de minimis investments, being investments: (i) of less than £50,000 made prior to the formation of a University of Southampton Spin-Out Company with the unanimous consent of the investment committee; and (ii) of less than £20,000 provided that not more than five of such investments are made in any one year). The investment committee comprises the director of the University of Southampton's Centre for Enterprise and Innovation, the chief executive officer of IP2IPO Limited (who is to be chairman with a second and casting vote), the non-executive directors of SAM (excluding non-executive directors who are University of Southampton Academic Staff (as defined in sub paragraph (vii) below) or full time employees of the University of Southampton or IP2IPO Limited) and two persons nominated by IP2IPO Limited. Any investment decision requires the affirmative vote of the chief executive officer of IP2IPO Limited. If such affirmation is not given, the matter is to be referred to the steering committee (see sub-paragraph (x) below);
• (vi) investments in University of Southampton Spin-Out Companies are made on the basis of a pre-money valuation of £750,000. It is intended that IML has the right of first access to University of Southampton Spin-Out Companies in order to supply IML with opportunities to invest the £5m Southampton Fund and the parties to the framework agreement are obliged to use reasonable endeavours to ensure, whenever possible, that IML is placed in a position where it has the first opportunity to invest in any University of Southampton Spin-Out Company. Whilst it is the intention that IML shall have first access to each University of Southampton Spin-Out Company, in certain cases other sources of finance closely associated with the University of Southampton will have coinvestment rights;
• (vii) the division of equity in a University of Southampton Spin-Out Company (prior to any £5m Southampton Fund investment by IML and any third party investment and prior to the issue of shares or options to University of Southampton Spin-Out Company management (other than academic staff employed by the University of Southampton ("University of Southampton Academic Staff")) shall, as between the University of Southampton and the relevant University of Southampton Academic Staff, be assessed on a case by case basis. However, the University of Southampton has given assurances that it is reasonable for the parties to assume that in most cases, SAM will be entitled to hold not less than 50 per cent. of the equity in a University of Southampton Spin-Out Company prior to any investment in that company (and excluding any shares issued to management who are not University of Southampton Academic Staff);
• (viii) IML is obliged to make the £5m Southampton Fund available for the purposes of investing in University of Southampton Spin-Out Companies over four years (i.e. at £1.25 million per annum before charges) although any monies not invested in any given year are rolled into the following year's allocation of £1.25 million. With the unanimous consent of the investment committee, IML is entitled to make investments exceeding £1.25 million in any year. It is envisaged that the average investment will be of the order of £250,000 but no single investment greater than £500,000 can be made without the unanimous consent of the investment committee and the board of directors of IML. The £5m Southampton Fund may also be invested in a small number of cases on a pre-incorporation basis (not to exceed £50,000 in any case) for the purpose of

enabling an identifiable project to progress to the point where formation of a University of Southampton Spin-Out Company becomes practicable;

• (ix) IP2IPO Limited is entitled to charge, and IML shall pay, a fee chargeable against the £5m Southampton Fund of 2 per cent. per annum (that is 2 per cent. of £5 million). The fee is payable annually in arrears. No fee is payable once the £5m Southampton Fund is fully invested;
• (x) a steering committee (comprising three representatives of IP2IPO Limited, two representatives of the University of Southampton and one representative of SAM (being one SAM non-executive director)) shall be established to conduct those activities set out in the framework agreement, including, monitoring and reviewing the activities of the parties in relation to the framework agreement with a view to maximising the benefits of the parties, suggesting improvements and changes to the arrangements contained in the framework agreement and considering and suggesting solutions in relation to any issue arising between the parties in relation to the framework agreement;
• (xi) the University of Southampton acknowledges that IP2IPO Limited may wish to supply business development services to any University of Southampton Spin Out Company and it shall not object to the same being so provided;
• (xii) IP2IPO Limited is also obliged to provide certain other services to the University of Southampton and SAM, including the provision of a secondee to work with the University's Centre for Enterprise and Innovation, subject to IP2IPO Limited indemnifying the University of Southampton in respect of certain acts of the same;
• (xiii) the University of Southampton undertakes not to enter into any similar agreement or arrangement with third parties during the term of the framework agreement without the consent of IP2IPO Limited;
• (xiv) an acknowledgement that in some cases it may be beneficial for IP2IPO Limited to hold its indirect interest in a University of Southampton Spin-Out Company (that is, the interest in a spin-out company to which IP2IPO Limited is entitled by virtue of its holding of 20 per cent. of the issued share capital of SAM) directly rather than indirectly through its shareholding in SAM. Provided that the University of Southampton and SAM are each satisfied that neither of them shall be prejudiced or disadvantaged in any way, IP2IPO Limited is entitled to require those shares in that University of Southampton Spin-Out Company which correspond to its 20 per cent. of the interest held by SAM to be issued to it. In such a case, IP2IPO Limited shall have no further rights in respect of the shares in that University of Southampton Spin-Out Company which are held by SAM and the articles of association of SAM give effect to that requirement;
• (xv) IP2IPO Limited and IML each warrant to the University of Southampton and SAM that each of them has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed by each of them;
• (xvi) upon the full utilisation of the £5m Southampton Fund, or the expiry of eight years from 20 March 2002, then the provisions of the framework agreement in relation to the £5m Southampton Fund will cease to have effect but the parties will enter into good faith negotiations as to the establishment of a further fund on similar terms;
• (xvii) the framework agreement may be terminated as follows:
• (1) broadly, after the twenty-fifth anniversary of the term of the framework agreement if the University of Southampton decides that it is not in the best

interests of the University of Southampton to continue with the framework agreement;

• (2) immediately by notice in writing given either by the University of Southampton or by IP2IPO Limited if: (aa) either party or any member of that party's group are in material, continuing or irremediable breach of any of its obligations under the framework agreement and, in relation to breaches capable of being remedied, fails to remedy the same within a period of 30 days after written notice of the breach; or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement);
• (3) if during the term of the framework agreement there has been a significant change of control (defined as any person other than The Evolution Group plc or any member of its group) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO Limited or IML;
• (4) if the chief executive officer of IP2IPO Limited fails to affirm in any twelve month period three or more decisions of the investment committee (ignoring any failures to affirm which the steering committee decides were justified);
• (5) if IP2IPO Limited ceases to be actively engaged in the commercialisation of IP of universities or other public sector research institutions either after the £5m Southampton Fund has been fully utilised (ignoring any sum of less than £20,000) or on the expiry of 8 years from the date of the framework agreement; or
• (6) IP2IPO Limited may terminate the framework agreement if there has been a change of law or tax change which results in it no longer being economic for IML to invest in the University of Southampton Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IML (for example no formal proposals being received by the investment committee for a two year period) or the University of Southampton or SAM ceases to own IP created at the University of Southampton.

15.2.2 Subscription and Shareholders Agreement

Pursuant to a subscription and shareholders agreement dated 20 March 2002 and made between (1) USHL, (2) IP2IPO Limited and (3) SAM, USHL agreed to subscribe at par for 78 "A" ordinary shares of £1 each in SAM (which, when aggregated with USHL's existing holding of 2 "A" ordinary shares, gave USHL 80 per cent. of the issued share capital of SAM) and IP2IPO Limited agreed to subscribe at par for 20 "B" ordinary shares of £1 each in SAM (which gave IP2IPO Limited 20 per cent. of the issued share capital of SAM).

The principal provisions of the subscription and shareholders' agreement are as follows:

• (a) SAM gave warranties in respect of its post incorporation status to each of USHL and IP2IPO Limited;

• (b) IP2IPO Limited has the right to appoint one director to the board of directors of SAM and the right to remove or replace any such director from time to time. Pending any such appointment, IP2IPO Limited has the right to appoint, remove and replace an observer who shall be entitled to attend and speak, but not vote, at meetings of the board of directors of SAM. Any director appointed by IP2IPO Limited may report back to the Company in relation to the proceedings of the board of directors of SAM and at each meeting of such board of directors may represent the position of the Company. IP2IPO Limited shall be responsible for and shall indemnify USHL and SAM against any claim made by any director or observer appointed and subsequently removed by it;

• (c) until IP2IPO Limited ceases to hold (in aggregate) 20 per cent. of the entire issued share capital of SAM, the parties to the agreement have agreed that certain minority protection rights in favour of IP2IPO Limited shall apply, including the following prohibitions without the prior written consent of IP2IPO Limited: the issue of new shares in SAM; the alteration to the memorandum and articles of association of SAM; the borrowing of any money by SAM; the disposal of any of its business or undertaking; and any change in the nature and scope of the business of SAM;

• (d) no transfer of shares in the share capital of SAM by a shareholder in SAM is allowed unless the transfer is in accordance with the permitted transfer provisions of the articles of association of SAM or with the prior written consent of the other shareholder; and
• (e) the subscription and shareholders' agreement shall continue unless and until the earlier of: (a) IP2IPO Limited or USHL ceasing to hold any shares in SAM; (b) a resolution is passed or an order is made to wind-up SAM; (c) a listing of SAM's share capital is achieved; or (d) the parties agree that such agreement should terminate.

15.2.3 Articles of Association of SAM

The articles of association adopted by SAM under the terms of the subscription and shareholders' agreement provide that:

• (a) the "A" ordinary shares and "B" ordinary shares rank equally but the holders of "B" ordinary shares (held by IP2IPO Limited) have the right to appoint one director;
• (b) no shareholder may transfer, create or dispose of any interest in any share other than to members of its group or to a bare nominee or, in the case of a holder of "B" ordinary shares, to any investment fund or trustee, nominee or custodian; and

give effect to the arrangement specified in sub-paragraph (xiv) above in the summary of the framework agreement relating to the University of Southampton Partnership.

15.3 Summary of the agreements relating to the King's College London Partnership

15.3.1 Commercialisation Agreement

Pursuant to a commercialisation agreement dated 12 November 2009 and made between (1) King's College London, (2) King's College London Business Limited ("KB") and (3) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of IP created by King's College London's academic staff, students and third parties which vests in King's College London ("KCL IP"), including by way of companies established in conjunction with, or with the consent of, King's College London with a view to the commercialisation of KCL IP (each a "KCL Spin Out Company"). Broadly summarised, these arrangements entitle IP2IPO Limited to invest in KCL Spin-Out Companies a sum of £3,200,000 (being the balance of the original £5m King's Fund not utilised at the date of the commercialisation agreement) in approximately equal tranches of £1,000,000 over a period of three years from the date of the agreement.

The principal provisions of the commercialisation agreement are as follows:

• (a) IP2IPO Limited shall make a designated employee experienced in commercialising IP via spin-out companies (the "Account Manager") available to KB to advise KB on the commercialisation of KCL IP. The Account Manager shall spend approximately 50 per cent. of the hours of a full time employee on this role;
• (b) KB may at its sole discretion submit to the Account Manager for review a proposal for IP2IPO Limited to invest in a KCL Spin-Out Company or a proposed KCL Spin-Out Company. IP2IPO Limited shall review the proposal in detail and shall respond to KB in writing within one month of its receipt of KB's proposal, attaching a plan (if

relevant) setting out how IP2IPO Limited proposes to progress with regard to the relevant KCL Spin-Out Company;

• (c) IP2IPO Limited's right to invest in a KCL Spin-Out Company will expire if it fails to meet any of the relevant deadlines prescribed in the agreement or if it has not subscribed for shares in the relevant KCL Spin-Out Company within seven months of its receipt of KB's proposal in respect thereof;
• (d) the initial objective is for IP2IPO Limited to invest a sum of £3,200,000 over a three year period in approximately equal tranches of £1,000,000 per year in KCL Spin-Out Companies (and proposed KCL Spin-Out Companies), although this will depend on the quantity and quality of investment opportunities. In circumstances where it may be more appropriate for IP2IPO Limited to invest a lesser amount, such an investment would be made in the form of an unsecured interest free convertible loan and would generally be of an amount of up to £50,000. Investments in KCL Spin-Out Companies are made on the basis of a pre-money valuation of £750,000 in the case of seed funding. This valuation assumes that, prior to the Group's investment, the spin-out company will already have issued equity to KCL and the relevant founders of the spin out company and, where relevant, the spin-out companies initial management team;
• (e) IP2IPO Limited agrees not to unreasonably withhold its consent to a third party seed capital investment in KCL Spin-Out Companies on the same terms as those made available to IP2IPO Limited;
• (f) King's College London and KB jointly and severally agree that they will not during the term of the agreement enter into an agreement with any third party whereby KB may systematically offer a third party the opportunity to make investments in KCL Spin-Out Companies. However, this does not prevent King's College London or KB from offering to third parties on an ad hoc basis the opportunity to make seed capital or other investments in KCL Spin-Out Companies;
• (g) the agreement shall terminate on 14 May 2028 unless terminated earlier as follows:
• (i) the agreement may be terminated by any party without cause on the seventh anniversary of the date of the agreement by giving the other parties at least sixty days' prior written notice. If notice is not served, the parties' right to terminate shall lapse; and
• (ii) the agreement may be terminated by any party immediately by written notice to the others if: (1) another party commits a material breach of the agreement which it does not remedy within thirty days of receiving written notice of the breach; or (2) an interim order is applied for or made, or a voluntary arrangement approved, or a petition for a bankruptcy order is presented, or any circumstances arise which entitle the court or a creditor or the company or its directors to appoint a receiver, administrative receiver or administrator; and
• (h) the agreement shall not automatically terminate in the event of a merger. In the event of a merger by King's College London, IP2IPO Limited will enter into a consultation phase with King's College London and the university with which King's College London proposes to merge to ascertain whether and how IP2IPO Limited can become involved in the commercialisation of the merged entity's IP on similar terms to those set out in the commercialisation agreement.

15.4 Summary of the agreements relating to the CNAP Partnership

15.4.1 Framework Agreement

(a) Pursuant to a framework agreement dated 19 September 2003 and made between (1) the University of York, (2) IP2IPO Limited; and (3) Amaethon Limited ("AL") (as amended on 16 March 2005), the parties agreed certain arrangements with regard to the exploitation of IP created or owned by certain persons based at the Centre of Novel Agricultural Products within the Biology Department of the University of York ("CNAP IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 40 per cent. interest, through AL, in: (i) any company established with a view to the commercialisation of CNAP IP (each a "CNAP Spin-Out Company"); and (ii) benefits (including licence fees) arising from the licensing or assignment of CNAP IP (other than to a CNAP Spin-Out Company). IP2IPO Limited will also be entitled to shares in CNAP Spin-Out Companies following an investment from the CNAP Fund (as defined in sub-paragraph (b) (vi) below).

• (b) The principal provisions of the framework agreement are as follows:
• (i) AL will be owned as to 60 per cent. by the University of York and 40 per cent. by IP2IPO Limited;
• (ii) both the University of York and, subject to the University of York exercising such right, IP2IPO Limited have the option at any time thirty days before AL raises capital by way of an issue of equity shares or the admission to a recognised investment exchange of AL or any equity shares in AL, to a certain percentage of AL's income thereafter received subject to a proportion of its shares in AL being converted into deferred shares which carry no right or entitlement;
• (iii) the University of York agrees for the duration of the framework agreement to make all CNAP IP exclusively (subject to certain limited exceptions) available to AL and AL may call for CNAP IP to be transferred either to itself or to whomever it may direct. AL shall seek to exploit CNAP IP through the formation of CNAP Spin-Out Companies or through licensing agreements (entered into during the term of the framework agreement) under which AL licences out CNAP IP to a third party in return for a fee;
• (iv) AL shall be the sole and exclusive IP commercialisation company for CNAP IP and shall be responsible for the exploitation of CNAP IP;
• (v) the University of York and AL each undertake not to enter into any similar agreement or arrangement with third parties during the term of the framework agreement in respect of CNAP IP without the consent of IP2IPO Limited. However, if the CNAP Fund is not extended beyond the initial term of three years, then AL may enter into arrangements with third parties in relation to the provision of seed capital;
• (vi) IP2IPO Limited will make a fund (the "CNAP Fund"), initially in the amount of £750,000, available to enable seed capital investments in CNAP Spin-Out Companies to be made. Investments in any CNAP Spin-Out Company are to made in accordance with the investment protocol set out in the framework agreement. In addition, IP2IPO Limited will also be able to invest the CNAP Fund in companies formed to commercialise CNAP IP that is partially owned by AL and partially owned by third parties;
• (vii) the objective is that the CNAP Fund is invested over three years. Once the CNAP Fund has been fully invested, IP2IPO Limited shall have the right to extend the CNAP Fund;
• (viii) IP2IPO Limited will invest the CNAP Fund on the basis of a standard valuation for all CNAP Spin-Out Companies, namely a pre-money valuation of £500,000 at the point at which the investment is made. This valuation assumes that the CNAP Spin-Out Company will already have issued shares to AL and the

relevant academic staff of the University of York or CNAP Research Centre staff who generated the relevant CNAP IP ("Inventors"), and, where relevant, the CNAP Spin-Out Company's initial management and any third party with a prior interest in the relevant IP. Investment in any CNAP Spin-Out Company shall not exceed £300,000 unless the members of the investment committee unanimously agree;

• (ix) IP2IPO Limited may also invest the CNAP Fund, subject to certain financial limits, in projects which are close to the point of commercialisation and require a relatively small amount of funding specifically for the purposes of advancing the project to the point where it is possible to form a CNAP Spin-Out Company or enter into a licence of the relevant CNAP IP;
• (x) investment decisions in relation to CNAP Spin-Out Companies will be made by an investment committee. The investment committee comprises the chief executive of AL and three persons nominated by the University of York, the chief executive officer of IP2IPO Limited (who shall be chairman with a second and casting vote) and two persons nominated by IP2IPO Limited. IP2IPO Limited is only entitled or obliged to make an investment from the CNAP Fund if the investment committee is satisfied that IP2IPO Limited has sufficient control over its investment;
• (xi) the framework agreement specifies how any licence fees on out licensing shall be allocated between the inventors of the relevant CNAP IP and AL. In addition, the framework agreement provides that the Inventors' pre-money share in the relevant CNAP Spin-Out Companies will be 28 per cent., with the remaining 72 per cent., being held by AL;
• (xii) IP2IPO Limited was obliged to provide AL with working capital of up to £1,000,000. Thereafter, the working capital was to be provided by IP2IPO Limited in three tranches as follows. Once the framework agreement became unconditional, IP2IPO Limited made a payment to AL of £333,333 in subscription for 333,333 B shares of £1 each in AL (such B shares carry no right or entitlement). On AL meeting the target of completing the seed funding of one or more CNAP Spin-Out Companies and entering into two or more out licences by the first anniversary of the date upon which the framework agreement becomes effective, IP2IPO Limited became obliged to provide an additional £333,333 to AL in subscription for a further 333,333 B shares. Finally, once certain minimum performance targets as set by the board of directors of AL (which shall be no less than the target above) were achieved in the period between the first and second anniversaries of the date on which the framework agreement became effective, IP2IPO Limited become obliged to provide a final payment of £333,334 to AL in subscription for a further 333,334 B shares. In 2005, the parties subsequently agreed to the amendment of this agreement such that IP2IPO Limited subscribed for the second and third tranches of B shares without the milestone conditions having been satisfied in full and the Group shareholding in AL was increased to 40 per cent.;
• (xiii) to enable AL to hire an additional member of staff, IP2IPO Limited will over a three year period pay AL £50,000 each year in subscription at par for 50,000 B shares;
• (xiv) the parties acknowledged that an exit for AL is desirable and that they would work together in good faith to realise value for the shareholders in AL;
• (xv) IP2IPO Limited will provide services and assistance to AL including attracting new investors and providing advice with respect to commercialisation projects

and IP2IPO Limited will be entitled to sell its corporate development services to CNAP Spin-Out Companies;

• (xvi) the parties gave certain limited warranties to each other;
• (xvii) the framework agreement may be terminated as follows:
• (1) immediately by notice in writing given either by the University of York or by IP2IPO Limited: if (aa) either party or any member of that party's group are in material, continuing or irremediable breach of any of its obligations under the framework agreement and, in any such case (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach; or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
• (2) IP2IPO Limited may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for AL to invest in CNAP Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available in relation to CNAP IP (for example no formal proposals being received by the investment committee for a two year period) or the University of York or AL ceasing to own CNAP IP (other than anticipated under the framework agreement) which, in any such case, cannot be rectified or, as the case may be, rectified after notice;
• (xviii) if AL suffers from some form of insolvency (as more particularly described in the framework agreement) then, subject to the University of York not intentionally causing such event to occur or materially contributing to it occurring and/or rejecting an offer of finance which would enable AL to return to solvency, then the University of York may notify the other parties that all future CNAP IP will cease to be available to AL;
• (xix) the framework agreement commenced on 19 September 2003 and subsists for a period of 25 years from the date upon which the agreement becomes effective; and
• (xx) on the date that the framework agreement came into effect the parties entered into the subscription and shareholders' agreement referred to below.

15.4.2 Subscription and Shareholders' Agreement

• (a) Pursuant to a subscription and shareholders' agreement entered into on 31 October 2003 between (1) the University of York, (2) IP2IPO Limited and (3) AL, the University of York agreed to subscribe at par for 6,566 ordinary shares of 1 pence each in AL (which when aggregated with the University's existing holding of 100 A ordinary shares of 1 pence each in AL gave the University of York two-thirds of the issued share capital of AL) and IP2IPO Limited agreed to subscribe at par for 3,333 A ordinary shares of 1 pence each in AL (which gave IP2IPO Limited one-third of the issued share capital of AL).
• (b) The principal provisions of the subscription and shareholders' agreement are as follows:
• (i) AL gave warranties in respect of its post incorporation status to each of the University of York and IP2IPO Limited;
• (ii) the University of York has the right to appoint up to four directors to the board of directors of AL and IP2IPO Limited has the right to appoint up to two

directors to the board of directors of AL, together with the right to remove or replace any such director from time to time. Any director appointed by IP2IPO Limited may report back to the Company in relation to the proceedings of the board of directors of AL and at each meeting of such board of directors may represent the position of the Company. IP2IPO Limited shall be responsible for, and shall indemnify the University of York and AL against, any claim made by any director appointed and subsequently removed by it;

• (iii) until IP2IPO Limited ceases to hold (in aggregate) 20 per cent. of the entire issued share capital of AL, the parties to the agreement have agreed that certain minority protection rights in favour of IP2IPO Limited shall apply, including the following prohibitions without the prior written consent of IP2IPO Limited; the issue of new shares in AL; any alteration to the memorandum and articles of association of AL; the disposal of any of its business or undertaking; the transfer of any shares in AL; and the disposal of any IP otherwise than in the ordinary course of business or in a manner consistent with the framework agreement;
• (iv) AL will, provided it has sufficient working capital, distribute its distributable profits at least annually provided that no such distributions shall be made within two years of the date of the subscription and shareholders' agreement;
• (v) upon signature of the subscription and shareholders' agreement, AL was obliged to deliver a warrant to IP2IPO Limited entitling it, if AL issues shares (subject to certain exceptions) at a price of less than £1, to subscribe at par for such further A ordinary shares of 1 pence each as is equal to the number of A ordinary shares it then holds; and
• (vi) the subscription and shareholders' agreement shall continue unless and until the earlier of (a) IP2IPO Limited or the University of York ceasing to hold any shares in AL; (b) a resolution is passed or an order is made to wind-up AL; (c) the admission of AL's share capital to any recognised investment exchange; or (d) the parties agree that such agreement should terminate.

15.4.3 Articles of Association of AL

The articles of association adopted by AL under the terms of the subscription and shareholders' agreement provide that:

• (a) the ordinary shares and A ordinary shares rank equally but the holders of ordinary shares have the right to appoint up to four directors and to remove, substitute or replace any of such directors and the holders of A ordinary shares have the right to appoint up to two A directors and to remove, substitute or replace any of such directors;
• (b) the B shares of £1 each carry no right or entitlement;
• (c) no shareholder may transfer, create or dispose of any interest in any share other than to members of its group or to a bare nominee or in the case of a holder of A ordinary shares or B shares to any investment fund or trustee, nominee or custodian provided that beneficial ownership does not vest in anyone who is not a member of the same group as that shareholder; and
• (d) on a take-over or admission of the share capital of AL to any recognised investment exchange the holders of ordinary shares and A ordinary shares shall be entitled to such proportion of the proceeds as the number of ordinary and A ordinary shares held by them bears to the total of ordinary and A ordinary shares then in issue.

15.5 Summary of the agreements relating to the University of Leeds Partnership

15.5.1 Agreement for the Provision of Technology Transfer Services

Pursuant to an agreement for the provision of technology transfer services dated 15 July 2005 made between (1) the University of Leeds, (2) Techtran and (3) the Company, the parties agreed certain arrangements with regard to the commercialisation of IP created by the University of Leeds' academic staff which vests in the University of Leeds (the "Leeds IP").

Broadly summarised, these arrangements entitle the Group to an approximate 30 per cent. interest in the shares in any company established with a view to the commercialisation of Leeds IP (each a "Leeds Spin-Out Company") where it has been recommended that the relevant Leeds IP be exploited (which is approved by the IPEC (as defined below)) and an interest in investments from the £5 million Leeds Fund in Leeds Spin-Out Companies.

The principal provisions of the agreement are as follows:

• (a) the relationship between the Company and the University of Leeds (including the process of reviewing new opportunities, monitoring the portfolio of investments and relationship management) is conducted through the following four committees:
• (i) the Intellectual Property Executive Committee (the "IPEC") this comprises one person nominated by the Company and two persons nominated by the University of Leeds. The role of the IPEC is to set and monitor strategy in relation to the protection of Leeds IP, including encouraging inventors to give the Company formal notification of all new opportunities to commercialise Leeds IP. The IPEC is required to meet as necessary, but at least six times a year;
• (ii) the Investment Committee the role of the investment committee is to review the merits of investment proposals on a case by case basis and to reject, clarify or approve such proposals and to review the pipeline of potential forthcoming opportunities. The investment committee comprises three persons nominated by the University of Leeds and two persons nominated by the Company and meets as required, but not less once every three months. Meetings of the investment committee are chaired by a person nominated by the Company. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such a veto can only be exercised once in any twelve month period and only on commercial grounds;
• (iii) Portfolio Monitoring Committee this comprises four members, two nominated by each of the University of Leeds and the Company. The primary responsibility of the committee is the ongoing review of the performance of the portfolio of Leeds IP managed by the Company or in which the Company has an economic interest. This committee meets as required, but at least three times a year; and
• (iv) Relationship Management Committee this comprises at least two persons nominated by each of the University of Leeds and the Company and meets every six months to conduct an ongoing review into operational matters to accommodate the need to establish a transparent, accountable, efficient and cost effective process and to review the level of service offered by the Company;
• (b) the Company agreed to pay the University of Leeds £1.4 million in consideration of the transfer of 50 per cent. of the University of Leeds' holdings in three companies to the Company;
• (c) any proceeds (net of tax) received by the University of Leeds from a sale of the whole or part of their shareholding in a Portfolio Company (as defined in the agreement but including those companies referred to in paragraph (b) above, certain other specified companies ("Innovations Companies") and Leeds Spin-Out Companies formed or

acquired to commercialise Leeds IP under the agreement (or an earlier agreement entered into in 2002) in which the Company is entitled to a stake) are to be divided, subject to certain limited qualifications, such that the University of Leeds receives the value of its interest in 2002 as specified in the agreement (if any) and thereafter in the proportions 25:75 as between the University of Leeds and the Company until such time as the Company has received £1.4 million in aggregate. Thereafter, the parties will retain any proceeds from the sale of their respective shares, save where the University of Leeds sells an Innovations Company in which it holds shares on behalf of the Company in which case the balance of the sale proceeds will be divided equally;

• (d) the Company has agreed to provide such assistance in relation to the commercialisation of Leeds IP as the parties agree from time to time, it being the intention that the Company will usually be involved in: (i) identifying IP with the assistance of the University of Leeds, inventors, students and employees; (ii) assisting in the incorporation of Leeds Spin-Out Companies; (iii) marketing, negotiating and agreeing Leeds IP licensing agreements; (iv) providing assistance to Leeds Spin-Out Companies in their commercial development; (v) advising on the most effective method of commercialising Leeds IP; and (vi) acting as a focal point for the commercialisation of Leeds IP. The Company has agreed to ensure that an average of not less than four full time staff with due experience are exclusively dedicated to delivering the services;
• (e) the University of Leeds will promote the Company as its technology transfer partner in the process of the commercialisation of Leeds IP;
• (f) if, following notification of the Company's recommendation to commercialise Leeds IP (as provided in the agreement) the University of Leeds chooses to commercialise Leeds IP through licensing, the Company is entitled to 30 per cent. of the net revenue and is responsible for the sourcing of the licensee;
• (g) the Company may provide commercialisation services to Leeds Spin-Out Companies;
• (h) the Company will make the £5 million Leeds Fund available with the initial objective of investing the initial £5 million over a period of 5 years from the date of the agreement in approximately equal tranches of £1 million a year. No investment in a single opportunity of greater than £300,000 may be made without the consent of the investment committee. The Company has the right, but not the obligation, to extend the £5 million Leeds Fund;
• (i) the parties agree that they shall use their voting rights in respect of any Leeds Spin-Out Company to endeavour to ensure that the £5m Leeds Fund has the first right to make seed fund investments in Leeds Spin-Out Companies. The agreement recognises that there may be circumstances where the founder of a Leeds Spin-Out Company may not want to accept seed capital from the £5m Leeds Fund and in such a case the University of Leeds will not be in breach of its obligations under the agreement. There are a number of other sources of seed capital finance who have the right to invest on terms no less favourable than those available to the £5 million Leeds Fund up to one half of the total aggregate being invested in the Leeds Spin-Out Company by the £5 million Leeds Fund;
• (j) the £5 million Leeds Fund is divided into two elements being £4.5 million (the "Seed Fund") and £0.5 million. The Seed Fund will invest on the basis of a standard valuation for all Leeds Spin-Out Companies, namely a pre-money valuation of £750,000 at the point when the Seed Fund invests. This valuation assumes that the Leeds Spin-Out Company will have already issued shares to the University of Leeds and the staff of the University of Leeds who made a valuable contribution to the development of the relevant Leeds IP and, where relevant, the initial management team of the Leeds Spin-Out Company. The £0.5 million fund will make small "proof of concept" investments

through unsecured non interest bearing debt instruments converting at the time of Seed Fund investment at the pre-money valuation of £750,000;

• (k) the £5 million Leeds Fund shall not be entitled to make investments in any Leeds Spin-Out Company in any subsequent fund raising rounds without the consent of the investment committee;
• (l) if the IPEC does not approve the exploitation of Leeds IP which IP Group has recommended, or if IP Group is not given access to Leeds IP to assess it, then IP Group is entitled to such number of shares in the relevant Leeds Spin-Out Company as is equal to 5/95ths of the then fully diluted equity share capital issued to the University of Leeds and staff who made a valuable contribution to the development of the relevant Leeds IP;
• (m) the University of Leeds has confirmed that, during the period that the £5 million Fund is available, it will not enter into arrangements with a third party to make available a fund or funds of a similar nature to exploit Leeds IP;
• (n) the agreement continues until midnight on 19 December 2027. The term of the agreement is divided into the period ending on 30 April 2010 (the "First Period") and each subsequent period (a "Subsequent Period") is of a duration which the parties agree (which in each case shall not be less than seven years);
• (o) within 30 days following the end of the First Period, IP Group is required to submit a statement certified by an independent accountant setting out the "Aggregate Value" and "Realisable Value" as at the end of the First Period. IP Group must ensure that as at that date the "Aggregate Value" (as defined in the agreement) is at least £7 million and the "Realisable Value" (as defined in the agreement) included within the Aggregate Value is at least £3 million in each case. If IP Group has not met these targets, then the University of Leeds may terminate the agreement within a specified period, failing which its right to terminate lapses. The parties are then required to seek to negotiate new targets for the next Subsequent Period, failing which the University of Leeds may ultimately terminate the agreement. The same process is applied in respect of each Subsequent Period;
• (p) the agreement may be terminated as follows:
• (i) by the University of Leeds on six months' notice if IP Group is in breach of its commitments under the agreement and has failed following three months' written notice to remedy such breach;
• (ii) by either party if the other is suffering from insolvency (as more particularly described in the agreement); and
• (iii) by IP Group if the Leeds' Socially Responsible Investment Policy is changed and IP Group reasonably believes that as a result it is unable to substantially continue with its commitment with regard to commercialisation services pursuant to the agreement and the University of Leeds has been unable to offer a satisfactory solution following 28 days notice of such concern.

15.5.2 Variation Agreement

Pursuant to a variation agreement dated 17 March 2011 between (1) the University of Leeds, (2) Techtran and (3) IP Group, the parties agreed certain variations, clarifications and supplemental terms to the agreement for the provision of technology transfer services dated 15 July 2005 (the "Original Agreement") which, in the event of a direct conflict, shall prevail over the terms of the Original Agreement.

The principal provisions of the variation agreement are as follows:

• (a) the parties shall work together to ensure the provision of a healthy pipeline of initial opportunity descriptions ("IODs") and to ensure that the Company receives a healthy stream of opportunities for its review;
• (b) a revised process of IOD selection will apply from the date of the variation agreement to ensure that all IODs are logged, tagged and disclosed by the University of Leeds' Commercialisation Services Team (the "CS Team") to the Company. The parties expect that 65 IODs per annum will be disclosed to the Company under this revised process of IOD selection, although this is not a fixed target;
• (c) under the revised process of IOD selection "tags" will be attributed to those IODs which are determined in accordance with the terms of the variation agreement to be:
• (i) "social enterprises", being not-for-profit enterprises;
• (ii) "knowledge based businesses", being potential businesses that: (i) do not own and/or are not based on patentable IP or are unlikely to generate patentable IP; and (ii) which are primarily reliant on know-how and copyright;
• (iii) "licensing opportunities" (see further paragraph (d) below);
• (iv) "lower value businesses", being companies which are anticipated to have a maximum potential value of no more than £5 million; and
• (v) "vetoed opportunities", being commercial opportunities which would otherwise have been available for the parties to exploit together but in respect of which the relevant inventor is unwilling to work with the Company.

The Company will have no right to subscribe or otherwise acquire equity in such tagged IODs or to receive any percentage of the net revenue generated by licensing the IP the subject of the tagged IODs.

• (d) however, in relation to IODs which are tagged because they are "licensing opportunities" and where:
• (i) such licensing opportunity results from the conversion of an IP Group incubated company;
• (ii) the Company establishes a company as a licensing vehicle for platform technology; and/or
• (iii) the Company has otherwise had significant input (including finding the potential licensee and negotiating the commercial heads of terms with such licensee)

then those IODs will be managed by the Company and, in respect of (i) and (iii) above, the Company will be entitled to receive 30 per cent. of the net revenues received directly by the University of Leeds in respect thereof;

• (e) the Company agrees that, in the three years from the date of the variation agreement (the "Initial Period"), it will work with the University of Leeds to seek to attain the following investment targets: (i) a base-line of grub fund investments of £200,000 per annum in aggregate; and (ii) a base-line of seed fund investments of £500,000 per annum in aggregate. Failure of the Company to attain these targets during the Initial Period will neither constitute a breach of the variation agreement nor entitle the University of Leeds to exercise the rights referred to in paragraph (f) below;
• (f) the investment targets referred to in paragraph (e) above will be continually assessed during the Initial Period and alternative targets (which may be higher or lower) may be

agreed by the parties following the Initial Period. Failure to attain investment at the levels specified after the Initial Period shall entitle the University of Leeds to:

• (i) place a moratorium on the payment of its share of profits from equity sales under the Original Agreement to the Company until the Company has attained investment at the levels specified; or
• (ii) terminate or suspend the Company's exclusive right to disclosure of IODs as envisaged in the variation agreement;
• (g) the parties will establish guidelines for managing the expectations of the University of Leeds' inventors as to the likely failure rate of grub funded projects, the likely causes for failure and potential strategies for mitigating any failures, as well as establishing agreed protocols for clean wind-ups of Leeds Spin-Out Companies which are not progressing from grub funding to seed investment or have otherwise failed;
• (h) the Company will work with the University of Leeds to unlock approximately £200,000 per annum of external "proof of concept" funding via grants and other forms of investment;
• (i) new valuation targets will apply as follows:
• (i) Part One: a valuation component that captures the fair value of the equity portfolio as at 30 April 2010, which shall be subject to growth parameters at least in line with the fair value anticipated by the Company. However, should the growth of the value of the University of Leeds' equity holdings not outperform the FTSE 250 Index percentage growth performance by 10 per cent. per annum, then the University of Leeds shall have the right to terminate the agreement on 30 April 2017; and
• (ii) Part Two: a valuation target for newly created ventures generated via this agreement from 17 March 2011 onwards. This target is in line with the target and experience from the date of the Original Agreement to the date of the variation agreement, being a target to achieve additional market capital valuation on top of that referred to in paragraph (i) above. This new valuation target will also be subject to an anticipated annual growth rate of 10 per cent. per annum over and above the FTSE 250 Index percentage growth performance (which shall be measured in respect of each new Leeds Spin-Out Company from the date of commitment of seed investment by the Company);
• (j) provision for the University of Leeds to charge royalties on net sales (of not less than 1 per cent. but not greater than 2 per cent.) in the IP licences that it enters into with Leeds Spin-Out Companies formed after 17 March 2011. Formerly, IP was licensed to the Leeds Spin-Out Companies on a royalty-free basis. However, such royalties will only be charged:
• (i) after the relevant business venture is generating profit;
• (ii) after the date which is 24 months following the date of incorporation of the relevant Leeds Spin-Out Company;
• (iii) where the annual financial statements of the relevant Leeds Spin-Out Company report EBIT in excess of £25,000 per annum for at least two concurrent years; and
• (iv) after the University of Leeds' equity stake in the relevant Leeds Spin-Out Company has fallen below 5 per cent. on a fully diluted basis.

In the event that the Company is not applying the royalty model referred to above on a consistent basis, the University of Leeds shall have the rights referred to in paragraph (f) above.

• (k) either party may terminate the variation agreement and the Original Agreement on 17 March 2014 (the "Break Date") by serving twelve months' notice in writing on the other parties at any time within the period of 30 days prior to the Break Date. If no such notice of termination is served, the next formal review of the variation agreement and the Original Agreement shall occur on 30 April 2017; and
• (l) the activities of the University of Leeds under, and the operational management of, the Original Agreement and variation agreement, together with the ongoing relationship between the parties shall, with effect from the date of the variation agreement, lie within the remit of three committees: the Intellectual Property Executive Committee, the Partnerships Operations Group and the Partnership Review Group, the purpose, methodology and membership of each is as detailed further in the variation agreement.

15.6 Summary of the agreement relating to the University of Bristol Partnership

15.6.1 Pursuant to a framework agreement dated 4 December 2005 and made between (1) the University of Bristol and (2) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Bristol academic staff, students and third parties which vests in the University of Bristol ("Bristol IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of Bristol IP (a "Bristol Spin-Out Company"), and an interest in investments from the £5m Bristol Fund in Bristol Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

• (a) IP2IPO Limited will make the £5m Bristol Fund available to make seed capital investments in any Bristol Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m Bristol Fund in companies formed to commercialise Bristol IP that is partially owned by the University of Bristol and partially owned by third parties;
• (b) the University of Bristol has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in Bristol Spin-Out Companies and/or which IP2IPO Limited have under the framework agreement;
• (c) IP2IPO has the first right to make seed capital investments in Bristol Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Bristol Spin-Out Company may not want to accept seed capital from the £5m Bristol Fund and in such a case the University of Bristol will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including a university challenge fund) who have a co-investment right alongside IP2IPO Limited but IP2IPO Limited has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Bristol Spin-Out Company;
• (d) once the £5m Bristol Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m Bristol Fund;
• (e) investment decisions in relation to Bristol Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of Enterprise at the University of Bristol, three persons nominated by the University of Bristol, a director of IP2IPO Limited (who shall be chairman of the meeting) and two persons nominated by IP2IPO Limited. The chairman of the investment committee may veto

what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;

• (f) the £5m Bristol Fund shall not be entitled to make investments in any Bristol Spin-Out Company in any subsequent fund raising rounds;
• (g) the £5m Bristol Fund will invest on the basis of a standard valuation for all Bristol Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Bristol Fund invests. This valuation assumes that the Bristol Spin-Out Company will have already issued shares to the University of Bristol and academic staff employed by the University of Bristol who were substantially involved in the generation of the Bristol IP relative to that Bristol Spin-Out Company and, as appropriate, the Bristol Spin-Out Company initial management team;
• (h) it is envisaged that the £5m Bristol Fund would be invested over a period of about five years at a rate of about £1 million per annum;
• (i) IP2IPO Limited is also obliged to provide certain services to the University of Bristol, including the provision of a secondee to work with the University of Bristol on technology transfer and the commercialisation of Bristol IP;
• (j) the University of Bristol recognises that IP2IPO Limited may wish to supply business development services to any Bristol Spin-Out Company and it shall not object to the same being so provided;
• (k) the University of Bristol undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO Limited;
• (l) a steering committee (comprising three representatives of IP2IPO Limited and three representatives of the University of Bristol) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and considering and suggesting solutions in relation to any issue arising between the parties in relation to the framework agreement;
• (m) IP2IPO Limited warrants to the University of Bristol that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
• (n) the framework agreement commenced on 4 December 2005 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
• (o) the framework agreement may be terminated as follows:
• (i) immediately by notice in writing given either by the University of Bristol or by IP2IPO Limited if: (aa) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and has been "finally determined" (as defined in the framework agreement); or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement);
• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in Bristol Spin-Out Companies or there

being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a two year period) or the University of Bristol ceases to own IP created at the University of Bristol which, in any such case, cannot be rectified or, as the case may be, rectified after notice;

• (iii) the University of Bristol may terminate the framework agreement if during the term:
• (1) the £5m Bristol Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the Investment Committee having received reasonably complete formal proposals for the same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Bristol Spin-out Companies based or largely based on Bristol IP by third parties in that period and formal proposals having been made in respect of such opportunities to the Investment Committee in that period; or
• (2) IP Group having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP Group having failed to remedy the same within a period of 30 days after written notice of the breach by the University of Bristol, and any such breach (whether remediable or not) continuing notwithstanding that the matter has been referred to and considered by the Steering Committee (but such referral shall not give rise to an automatic commitment to follow the further dispute resolution procedures); or
• (3) IP Group having lost more than 50 per cent. of its "Key Personnel" which they have not been able to replace within a period of twelve months, save where the business need for the skills of such person are no longer required in the performance of the services under the agreement. For these purposes "Key Personnel" means the Board of IP Group as at 31 December each year; or
• (4) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Bristol (in its reasonable opinion) to commercialise IP through Spin-out Companies; or
• (5) any person (other than a Group Company acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO Limited.

15.7 Summary of the agreement relating to the University of Surrey Partnership

15.7.1 Pursuant to a framework agreement dated 9 February 2006 and made between (1) the University of Surrey and (2) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Surrey academic staff, students and third parties which vests in the University of Surrey ("Surrey IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of Surrey IP (a "Surrey Spin-Out Company"), and an interest in investments from the £5m Surrey Fund in Surrey Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

(a) IP2IPO Limited will make the £5m Surrey Fund available to make seed capital investments in any Surrey Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m Surrey Fund in companies formed to commercialise Surrey IP that is partially owned by the University of Surrey and partially owned by third parties;

• (b) the University of Surrey has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in Surrey Spin-Out Companies and/or which IP2IPO Limited have under the framework agreement;
• (c) IP2IPO Limited has the first right to make seed capital investments in Surrey Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Surrey Spin-Out Company may not want to accept seed capital from the £5m Surrey Fund and in such a case the University of Surrey will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including a university challenge fund) who have a co-investment right alongside IP2IPO Limited but IP2IPO Limited has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Surrey Spin-Out Company;
• (d) once the £5m Surrey Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m Surrey Fund;
• (e) investment decisions in relation to Surrey Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of Enterprise at the University of Surrey, three persons nominated by the University of Surrey, a director of IP2IPO Limited (who shall be chairman of the meeting) and two persons nominated by IP2IPO Limited. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
• (f) the £5m Surrey Fund shall not be entitled to make investments in any Surrey Spin-Out Company in any subsequent fund raising rounds;
• (g) the £5m Surrey Fund will invest on the basis of a standard valuation for all Surrey Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Surrey Fund invests. This valuation assumes that the Surrey Spin-Out Company will have already issued shares to the University of Surrey and academic staff employed by the University of Surrey who were substantially involved in the generation of the Surrey IP relative to that Surrey Spin-Out Company and, as appropriate, the Surrey Spin-Out Company initial management team;
• (h) it is envisaged that the £5m Surrey Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;
• (i) IP2IPO Limited is also obliged to provide certain services to the University of Surrey, including the provision of a secondee to work with the University of Surrey on technology transfer and the commercialisation of Surrey IP;
• (j) the University of Surrey recognises that IP2IPO Limited may wish to supply business development services to any Surrey Spin-Out Company and it shall not object to the same being so provided;
• (k) the University of Surrey undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO Limited;
• (l) a steering committee (comprising three representatives of IP2IPO Limited and three representatives of the University of Surrey) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of

the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to consider and suggest solutions in relation to any issue arising between the parties in relation to the framework agreement;

• (m) IP2IPO Limited warrants to the University of Surrey that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
• (n) the framework agreement commenced on 9 February 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
• (o) the framework agreement may be terminated as follows:
• (i) immediately by notice in writing given either by the University of Surrey or by IP2IPO Limited if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and has been "finally determined" (as defined in the framework agreement); or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in Surrey Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a two year period) or the University of Surrey ceases to own IP created at the University of Surrey which, in any such case, cannot be rectified or, as the case may be, rectified after notice;
• (p) the University of Surrey may terminate the framework agreement if during the term:
• (i) the £5m Surrey Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the Investment Committee having received reasonably complete formal proposals for same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Surrey Spin-out Companies based or largely based on Surrey IP by third parties in that period and formal proposals having been made in respect of such opportunities to the Investment Committee in that period;
• (ii) IP2IPO Limited having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP2IPO Limited having failed to remedy the same within a period of 30 days after written notice of the breach by the University of Surrey, and any such breach (whether remediable or not) continuing notwithstanding that the matter has been referred to and considered by the Steering Committee (but such referral shall not give rise to an automatic commitment to follow the further dispute resolution procedures set out in the agreement);
• (iii) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Surrey (in its reasonable opinion) to commercialise IP through Surrey Spin-Out Companies; or
• (iv) any person (other than a Group company acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO Limited.

15.8 Summary of the agreements relating to the University of York Partnership

15.8.1 Framework Agreement

Pursuant to a framework agreement dated 10 March 2006 and made between (1) the University of York and (2) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of York academic staff and others which vests in the University of York (but excluding CNAP IP) ("York IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 15 per cent. interest in the shares in any company established with a view to the commercialisation of York IP (a "York Spin-Out Company"), and an interest in investments from the £5m York Fund in York Spin-Out Companies. The initial 15 per cent. interest in York Spin-Out Companies rises to 25 per cent. if the £5m York Fund makes an investment in that Spin-Out Company.

The principal provisions of the variation agreement are as follows:

• (a) P2IPO Limited will make the £5m York Fund available to make seed capital investments in any York Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m York Fund in companies formed to commercialise York IP that is partially owned by the University of York and partially owned by third parties;
• (b) the University of York has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective or effect of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in York Spin-Out Companies and/or which IP2IPO Limited has under the framework agreement;
• (c) IP2IPO Limited has the first right to make seed capital investments in York Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a York Spin-Out Company may not want to accept seed capital from the £5m York Fund and in such a case University of York will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance who have a co-investment right alongside IP2IPO Limited but IP2IPO Limited has the right to invest a minimum of 60 per cent. of the total seed capital invested in the York Spin-Out Company;
• (d) once the £5m York Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m York Fund;
• (e) investment decisions in relation to York Spin-Out Companies will be made by an investment committee. The investment committee comprises a senior officer of the University of York, two other persons nominated by the University of York, a director of IP2IPO Limited and two persons nominated by IP2IPO Limited. Meetings of the investment committee are to be chaired by the senior officer of the University of York or his nominee. The parties may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
• (f) the £5m York Fund shall not be entitled to make investments in any York Spin Out Company in any subsequent fund raising rounds;
• (g) the £5m York Fund will invest on the basis of a standard valuation for all York Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m York Fund invests. This valuation assumes that the York Spin-Out Company will have already issued shares to the University of York and academic staff employed by the University of York who were substantially involved in the generation of the York IP relative to that York Spin-Out Company and, as appropriate, the York Spin-Out Company initial management team. The parties will review the standard pre-money valuation following each seventh year of the agreement by reference to the pre-money

valuations at which other funds are invested at the relevant time by IP2IPO Limited in other university collaborations;

• (h) it is envisaged that the £5m York Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;
• (i) IP2IPO Limited is also obliged to provide certain services to the University of York, including the provision of personnel equivalent to not less than two full time persons to work with the University of York on technology transfer and the commercialisation of York IP;
• (j) the University of York recognises that IP2IPO Limited may wish to supply business development services to any York Spin-Out Company and it shall not object to the same being so provided;
• (k) the University of York undertakes not to enter any agreement or arrangement with third parties during the term of this framework agreement which gives rise to a material conflict with the intent and objectives of this Agreement without the consent of IP2IPO Limited;
• (l) a steering committee (comprising an equal number of senior representatives of each of the University of York and IP2IPO Limited) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to consider and suggest solutions in relation to any issue arising between the parties in relation to the framework agreement;
• (m) IP2IPO Limited warrants to the University of York that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
• (n) the framework agreement commenced on 10 March 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
• (o) the framework agreement may be terminated as follows:
• (i) immediately by notice in writing given either by the University of York or by IP2IPO Limited if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and, save in certain limited circumstances, has been "finally determined" (as defined in the framework agreement); or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement);

• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in York Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a two year period) or the University of York ceases to own IP created at the University of York or the merger of the University of York with another institution of equivalent size and scale which, in any such case, cannot be rectified or, as the case may be, rectified after notice;

• (iii) the University of York may terminate the framework agreement if during the term IP2IPO Limited has failed to provide monies from the £5m York Fund within a reasonable period after the investment committee has approved an investment proposal, or there has been a material change in law which results in it no longer being economic for the University of York to commercialise York IP through York Spin-Out Companies, or IP2IPO Limited has failed to reasonably satisfy the University of York that it has the funds to meet the obligations of the £5m York Fund such that the University of York in good faith considers that IP2IPO Limited may not be in a position to meet the obligations in relation to the £5m York Fund as and when they fall due; and

• (iv) by either party once the £5m York Fund has been fully invested if the collaboration between the parties has been proceeding with a reasonable pipeline of IP and York Spin-Out Company opportunities and IP2IPO Limited does not extend the £5m York Fund.

15.8.2 Side Agreement to the Framework Agreement

Pursuant to a side agreement to the framework agreement dated 27 March 2009 between (1) the University of York and (2) IP2IPO Limited, the parties agreed to certain changes to the rights and obligations under the framework agreement. Broadly summarised, the changes provide that IP2IPO Limited no longer has the obligation to provide any one or more full time employees and shall instead provide the University of York with assistance and resource on an "as and when needed" basis or in response to the University of York's reasonable request.

The principal provisions of the side agreement are as follows:

• (a) where IP2IPO Limited is informed of any new opportunity it shall have one month to evaluate such opportunity and to request that such opportunity be granted Opportunity Evaluation Status ("OES");
• (b) IP2IPO Limited shall have a further five months from the date on which OES is granted to evaluate the opportunity and to request that such opportunity is granted Active Opportunity Status ("AOS") by providing the University of York with a written proposal setting out proposals for the commercialisation of the relevant York IP by way of a York Spin-Out Company;
• (c) if the University of York opts to move the opportunity to AOS and proceed with the creation of a York Spin-Out Company or an element of grub funding, IP2IPO Limited agrees to provide business building assistance to develop the early proposition and onwards towards securing and completing see and follow on venture capital funding;
• (d) in respect of each York Spin-Out Company which obtains AOS, IP2IPO Limited shall subscribe for 25 per cent. of the initial equity in cash at par;
• (e) in respect of each York Spin-Out Company which does not obtain AOS but which IP2IPO Limited recommended should proceed to AOS, IP2IPO Limited will subscribe (in each case on or before the University of York assigns or licences the relevant York IP to the York Spin-Out Company) for 5 per cent. of the initial equity in cash at par;
• (f) IP2IPO Limited shall have no right or entitlement in respect of "Out Licensing" and/or to any "Licence Fees" (as defined in the framework agreement); and
• (g) the term of the side agreement was for a period of 12 months, and the parties agreed that at least 30 days prior to the expiry of this period the steering committee shall formally review the relationship following which they shall commence negotiations to agree appropriate permanent amendments to the framework agreement. To the extent

that the parties cannot agree on the amendments, the provisions of the framework agreement shall automatically be reinstated on an unamended basis.

15.9 Summary of the agreements relating to the Queen Mary Partnership

15.9.1 Framework Agreement

Pursuant to a framework agreement dated 20 July 2006 and made between (1) Queen Mary and Westfield College, University of London ("QMUL") and (2) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of the IP created by QMUL academic staff, students and third parties which vests in QMUL ("QMUL IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 10 per cent of all licence fees and a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of QMUL IP (a "QMUL Spin-Out Company").

The principal provisions of the framework agreement are as follows:

• (a) IP2IPO Limited will make the £5m QMUL Fund available to make seed capital investments in any QMUL Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m QMUL Fund in companies formed to commercialise QMUL IP that is partially owned by QMUL and partially owned by third parties;
• (b) QMUL has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in QMUL Spin-Out Companies and/or which IP2IPO Limited have under the framework agreement;
• (c) IP2IPO Limited has the first right to make seed capital investments in QMUL Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a QMUL Spin-Out Company may not want to accept seed capital from the £5m QMUL Fund and in such a case QMUL will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance which have a co investment right alongside IP2IPO Limited;
• (d) once the £5m QMUL Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m QMUL Fund;
• (e) investment decisions in relation to QMUL Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Innovation & Enterprise division of QMUL, three persons nominated by QMUL, a director of IP2IPO Limited (who shall be chairman of the meeting) and two persons nominated by IP2IPO Limited. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
• (f) the £5m QMUL Fund will be invested on the basis of a standard valuation for all QMUL Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m QMUL Fund invests. This valuation assumes that the QMUL Spin-Out Company will have already issued shares to QMUL and academic staff employed by QMUL who were substantially involved in the generation of the QMUL IP relative to that QMUL Spin-Out Company and, as appropriate, the QMUL Spin-Out Company initial management team;

• (g) it is envisaged that the £5m QMUL Fund will be invested over a period of about seven years at a rate of about £0.4 million per annum to £0.7 million per annum;

• (h) IP2IPO Limited is also obliged to provide certain services to QMUL, including the provision of personnel equivalent to one full time employee to be fully integrated into QMUL Innovation & Enterprise to work with QMUL on commercialisation of QMUL IP;

• (i) QMUL recognises that IP2IPO Limited may wish to provide business development and other services to any QMUL Spin-Out Company and it shall not object to the same being so provided;
• (j) QMUL undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO Limited;
• (k) a steering committee (comprising three representatives of IP2IPO Limited and three representatives of QMUL) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
• (l) IP2IPO Limited warrants to QMUL that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
• (m) the framework agreement commenced on 20 July 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
• (n) the framework agreement may be terminated as follows:
• (i) immediately by notice in writing given either by QMUL or by IP2IPO Limited if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in QMUL Spin Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a three year period); (c) QMUL ceasing to own all or substantially all of the IP which would otherwise vest in QMUL; or (d) the merger of QMUL with another institution of equivalent size and scale;
• (o) QMUL may terminate the framework agreement if during the term:
• (i) IP2IPO Limited has not invested in a QMUL Spin-Out Company within a reasonable period following a validly constituted investment committee approval of an investment proposal submitted and bindingly approved in accordance with the investment protocol;
• (ii) IP2IPO Limited has materially failed to meet its performance obligations, giving rise to a persistent and continuing failure to service the requirements of

potential QMUL Spin-Out Companies which has a profound and materially adverse affect on the ability to launch QMUL Spin-Out Companies;

• (iii) a material change of law or change in taxation policy or practice which results in it no longer being economic for QMUL (in its reasonable opinion) to commercialise IP through QMUL Spin-Out Companies;
• (iv) any person (other than a Group company) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO Limited; or
• (v) IP2IPO Limited has not extended the £5m QMUL Fund by the tenth anniversary of the date of the framework agreement by an additional £3 million where the arrangements between the parties are proceeding positively with a pipeline of University IP and QMUL Spin-Out Company opportunities being generated.

15.9.2 Variation Agreement

Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.

The principal provisions of the variation agreement are as follows:

• (a) the Company's obligation of providing a full time employee, "FTE" to QMLU (such as this term is defined in the Original Agreement), is removed and replaced with an IP2IPO Representative;
• (b) a revised and constructive way in which the IP2IPO Representative (and members of IP2IPO's client sourcing team) will work with Queen Mary Innovation Limited ("QMI") on the ground to identify commercialisation opportunities is suggested;
• (c) the parties agreed that IP2IPO's right to a share of licensing fees (as described in the first paragraph of paragraph 15.9.1 above) shall be removed save where (a) there is the conversion of an IP2IPO incubated company into an Out-Licensing opportunity, (b) IP2IPO establish a company as a licensing vehicle for platform technology, and/or (c) IP2IPO has otherwise had significant input in respect of the relevant Out Licensing opportunity (which would include both finding the potential licensee and undertaking negotiation of the commercial head of terms with such party);
• (d) IP2IPO initial founder equity right (as described in the first paragraph of paragraph 15.9.1 above) shall be removed and replaced with a warrant over an equivalent amount of shares in the relevant spin-out company exercisable at seed investment stage, save in situations whereby IP2IPO shall have expended efforts at an early stage to work up the relevant commercialisation opportunity to the stage where it is presented to the investment committee of IP2IPO but that the relevant opportunity is declined for investment from IP2IPO and as a consequence the relevant spin-out company goes onto raise money form a third party and or achieve an exit event (as defined in the relevant warrant instrument), then QMUL shall, until such time as an exit event is achieved, hold such number of equity shares in the relevant spin-out company as is equal to the proportion of Initial Equity that IPI2IPO would have been entitled under the Original Agreement, being 13.3 per cent. of the initial equity, on bare trust for IP2IPO; in the even that QMUL is unable to hold such equity shares on bare trust for IP2IPO, QMUL agrees and undertakes to ensure that IP2IPo receives an equivalent proportion of its share of any realisation proceeds generated by the exit event and actually received by QMUL in respect thereof.
• (e) more regular reviews of the agreement between the parties are set down.

15.10 Summary of the agreements relating to the University of Bath Partnership

15.10.1 Framework Agreement

Pursuant to a framework agreement dated 7 September 2006 and made between (1) the University of Bath, (2) IP2IPO Limited and (3) IP Group, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Bath academic staff, students and third parties which vests in the University of Bath ("Bath IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 20 per cent. interest in the shares in any company established with a view to the commercialisation of Bath IP (a "Bath Spin-Out Company"), a 20 per cent. interest in the licence fees of the University of Bath and an interest in investments from the £5m Bath Fund in Bath Spin-Out Companies. As noted in paragraph 15.10.3 below, the Group's entitlements do not arise in the event that the Group or its employees have not been actively involved in developing the relevant opportunity.

The principal provisions of the framework agreement are as follows:

• (a) IP2IPO Limited will make the £5m Bath Fund available to make seed capital investments in any Bath Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m Bath Fund in companies formed to commercialise Bath IP that is partially owned by the University of Bath and partially owned by third parties;
• (b) the University of Bath has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in Bath Spin-Out Companies and/or which IP2IPO Limited have under the framework agreement;
• (c) IP2IPO Limited has the first right to make seed capital investments in Bath Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Bath Spin-Out Company may not want to accept seed capital from the £5m Bath Fund and in such a case the University of Bath will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including the Sulis Seedcorn Fund) who have a co-investment right alongside IP2IPO Limited but IP2IPO Limited has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Bath Spin Out Company;
• (d) once the £5m Bath Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m Bath Fund;
• (e) investment decisions in relation to Bath Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Research and Innovation Services division of the University of Bath, three persons nominated by the University of Bath, a director of IP2IPO Limited (who shall be chairman of the meeting) and two persons nominated by IP2IPO Limited. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;

• (f) the £5m Bath Fund will invest on the basis of a standard valuation for all Bath Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Bath Fund invests. This valuation assumes that the Bath Spin-Out Company will have already issued shares to the University of Bath and academic staff employed by the University of Bath who were substantially involved in the generation of the Bath IP relative to that Bath Spin-Out Company and, as appropriate, the Bath Spin-Out Company initial management team;

• (g) it is envisaged that the £5m Bath Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;

• (h) IP2IPO Limited is also obliged to provide certain services to the University of Bath, including the provision of a secondee to work with the University of Bath on technology transfer and the commercialisation of Bath IP;
• (i) the University of Bath recognises that IP2IPO Limited may wish to supply advisory services to any Bath Spin-Out Company and it shall not object to the same being so provided;
• (j) the University of Bath undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO Limited;
• (k) a steering committee (comprising three representatives of IP2IPO Limited and three representatives of the University of Bath) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
• (l) IP2IPO Limited warrants to the University of Bath that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
• (m) the framework agreement commenced on 7 September 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
• (n) the framework agreement may be terminated as follows:
• (i) immediately by notice in writing given either by the University of Bath or by IP2IPO Limited if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in Bath Spin Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a three year period) or (c) the University of Bath ceases to own IP created at the University of Bath;
• (o) the University of Bath may terminate the framework agreement if during the term:
• (i) the £5m Bath Fund has not invested cash for equity in accordance with a decision of the investment committee within 20 working days of such decision being made (unless otherwise agreed);
• (ii) the £5m Bath Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the Investment Committee having received reasonably

complete formal proposals for same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Bath Spin-out Companies based or largely based on Bath IP by third parties in that period and formal proposals having been made in respect of such opportunities to the Investment Committee in that period;

• (iii) IP2IPO Limited having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP2IPO Limited having failed to remedy the same within a period of 90 days after written notice of the breach by the University of Bath, and any such breach (whether remediable or not) continuing;
• (iv) IP2IPO Limited having lost more than 50 per cent. of its key personnel which they have not been able to replace within a period of 12 months;
• (v) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Bath (in its reasonable opinion) to commercialise IP through Bath Spin-Out Companies; or
• (vi) any person (other than a Group company) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO Limited.

15.10.2 Amendment to framework agreement relating to use of IP2IPO fund for Pre Incorporation Investment

Pursuant to the agreement dated 13 December 2007 between (1) the University of Bath, (2) IP2IPO Limited and (3) the Company, the parties agreed to establish sufficient legal and other safeguards to protect the Pre-Incorporation Investment (as defined in the University of Bath Partnership) on the formation of a Bath Spin-Out Company. Broadly summarised, the agreement substitutes the terms of schedule 1 of the framework agreement dated 7 September 2006 and provides that the Pre Incorporation Investment shall not exceed £50,000 without the unanimous approval of the Investment Committee.

Where following the making of Pre-Incorporation Investment, the University of Bath elects to form a Bath Spin-Out Company, the amount of the Pre-Incorporation Investment shall be treated as a loan from IP2IPO Limited, used to purchase shares in the relevant Bath Spin-Out Company at the same price per share as any other cash investment in the first seed round of funding.

IP2IPO Limited will be granted a fully paid up irrevocable option to subscribe from the £5m Bath Fund for shares in a Bath Spin-Out Company formed in respect of the identifiable project in which the Pre-Incorporation Investment was made. The maximum seed investment of IP2IPO Limited from the £5m Bath Fund in any Bath Spin Out Company is £500,000, calculated in accordance with the framework agreement.

The Sulis Seedcorn Fund shall have the right to invest up to 40 per cent. of the total seed capital requirement of a Bath Spin-Out Company (in which it is agreed the £5m Bath Fund will invest) provided that the £5m Bath Fund shall have the right to invest a minimum of 60 per cent. of the total seed capital requirements on terms which are no less favourable to those available to Sulis. IP2IPO Limited and Sulis shall be entitled to invest further seed capital requirements of the relevant Bath Spin-Out Company on the basis that IP2IPO Limited may invest up to 60 per cent. and Sulis may invest up to 40 per cent. of the cash requirement of the relevant Bath Spin-Out Company.

Where, following the making of the Pre-Incorporation Investment, the identifiable project does not lead to a Bath Spin-Out Company but does progress to an Out Licence (as defined), an amount equal to the Pre-Incorporation Investment shall be repaid to the £5m Bath Fund out of the licence proceeds prior to any other use or distribution of the same by or to the University of Bath. Where, following the making of the Pre-Incorporation Investment, the identifiable project does not lead to the establishment of a Bath Spin-Out Company or an Out Licence, the loan from the Fund to the University of Bath in respect of the Pre Incorporation Investment shall be written off in full.

15.10.3 Side Agreement to the Commercialisation of IP Framework Agreement

Pursuant to the side agreement dated 24 March 2010 between (1) the University of Bath, (2) IP2IPO Limited and (3) the Company, the parties agreed certain changes to the framework agreement dated 7 September 2006.

Broadly summarised, this agreement terminated and replaced a previous side agreement (dated 2 March 2009). It provided that the Group's entitlements under the University of Bath Partnership in respect of licence fees and its "automatic" interest in equity would not arise if the Group or its employees had not been actively involved in working up the relevant commercialisation opportunity and provides that IP2IPO Limited is not obliged to procure that there be a single dedicated member of IP2IPO Limited staff working on the University's commercialisation projects on a substantially full time basis. Instead IP2IPO Limited shall appoint a principal point of contact in respect of the relationship between the parties, who shall engage with the Bath ventures team on a day-to-day basis.

The parties further agreed that any reference to the Sulis Fund in the framework agreement should be replaced by a reference to the University of Bath Crescent Seedcorn Fund, which is held exclusively by the University of Bath.

15.11 Summary of agreements relating to the University of Glasgow Partnership

15.11.1 Framework Agreement

Pursuant to a framework agreement dated 10 October 2006 and made between (1) the University Court of the University of Glasgow and (2) IP2IPO Limited, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Glasgow academic staff, students and third parties which vests in the University of Glasgow ("Glasgow IP"). Broadly summarised, these arrangements entitle IP2IPO Limited to a 12 per cent. interest in the shares in any company established with a view to the commercialisation of Glasgow IP (a "Glasgow Spin-Out Company").

The principal provisions of the framework agreement are as follows:

• (a) IP2IPO Limited will make the £5m Glasgow Fund available to make seed capital investments in any Glasgow Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO Limited is also able to invest the £5m Glasgow Fund in companies formed to commercialise Glasgow IP that is partially owned by the University of Glasgow and partially owned by third parties;
• (b) the University of Glasgow has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO Limited may have in Glasgow Spin-Out Companies and/or which IP2IPO Limited have under the framework agreement;
• (c) IP2IPO Limited has the first right to make seed capital investments in Glasgow Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Glasgow Spin-Out Company may not want to accept seed capital from the £5m Glasgow Fund and in such a case the University of Glasgow will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance who have a co-investment right alongside IP2IPO Limited (including a university challenge fund known as the

Synergy Fund) but IP2IPO Limited has the right to invest up to 75 per cent. of the total seed capital invested in the Glasgow Spin-Out Company;

• (d) once the £5m Glasgow Fund has been fully invested, IP2IPO Limited has the right but not the obligation to extend the £5m Glasgow Fund;
• (e) investment decisions in relation to Glasgow Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Research and Enterprise division of the University of Glasgow, three persons nominated by the University of Glasgow, a director of IP2IPO Limited (who shall be chairman of the meeting) and two persons nominated by IP2IPO Limited. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
• (f) the £5m Glasgow Fund will be invested on the basis of a standard valuation for all Glasgow Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Glasgow Fund invests. This valuation assumes that the Glasgow Spin-Out Company will have already issued shares to the University of Glasgow and academic staff employed by the University of Glasgow who were substantially involved in the generation of the Glasgow IP relative to that Glasgow Spin-Out Company and, as appropriate, the Glasgow Spin-Out Company initial management team;
• (g) it is envisaged that the £5m Glasgow Fund will be invested over a period of about five years at a rate of about £1 million per annum;
• (h) IP2IPO Limited is also obliged to provide certain services to the University of Glasgow, including the provision of personnel equivalent to one full time employee to be fully integrated into the University of Glasgow's Research and Enterprise division to work with the University of Glasgow on commercialisation of Glasgow IP;
• (i) the University of Glasgow recognises that IP2IPO Limited may wish to provide business development and other services to any Glasgow Spin-Out Company and it shall not object to the same being so provided;
• (j) the University of Glasgow undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO Limited;
• (k) a steering committee (comprising three representatives of IP2IPO Limited and three representatives of the University of Glasgow) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
• (l) IP2IPO Limited warrants to the University of Glasgow that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;

• (m) the framework agreement commenced on 10 October 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;

• (n) the framework agreement may be terminated as follows:

• (i) immediately by notice in writing given either by the University of Glasgow or by IP2IPO Limited if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
• (ii) IP2IPO Limited may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO Limited to invest in Glasgow Spin-Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO Limited (for example no formal proposals being received by the investment committee for a three year period); or (c) the University of Glasgow ceasing to own all or substantially all of the IP which would otherwise vest in the University of Glasgow; (d) the merger of the University of Glasgow with another institution of equivalent size and scale; or (e) the University of Glasgow failing to provide additional resource or to permit IP2IPO Limited to provide a second employee within a reasonable period following a determination by the steering committee that it agrees with IP2IPO Limited;
• (o) the University of Glasgow may terminate the framework agreement if during the term:
• (i) IP2IPO Limited has not provided monies from the Fund at the relevant time to the relevant Glasgow Spin-Out Company in accordance with the relevant investment proposal after a validly constituted investment committee has approved the investment;
• (ii) IP2IPO Limited has failed to submit any investment proposals in any rolling twelve month period;
• (iii) IP2IPO Limited has failed to invest at least £500,000 in one or more Glasgow Spin-Out Companies in any rolling 24 month period;
• (iv) there is a repeated failure to attend meetings of the investment committee by all IP Group representatives;
• (v) there is a failure to recruit the full time employee (see above) within four months of the date of entry into of the framework agreement or to terminate or replace such employee within a reasonable period at the University of Glasgow's request;
• (vi) there is a failure to extend the £5m Glasgow Fund beyond the initial £5 million once the £5m Glasgow Fund has been fully invested;
• (vii) IP2IPO Limited brings the University of Glasgow into disrepute;
• (viii) the £5m Glasgow Fund is restructured such that it in any way causes pecuniary loss to or otherwise materially prejudices or damages the interest of the University of Glasgow; and
• (ix) IP2IPO Limited fails to meet the performance targets further detailed in the framework agreement in relation to the amount of the £5m Glasgow Fund which has been invested or the cash/tradable equity levels within any review period

provided that if such breach is remedied within a 30 day period then the notice of termination shall be null and void and shall have no effect.

15.12 Summary of agreements relating to the IP Venture Fund

15.12.1 Limited Partnership Agreement

Pursuant to a limited partnership agreement dated 1 August 2007 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) IP Venture Fund (FP) Limited Partnership (the "Founding Partner"), the parties agreed certain changes to the IP Venture Fund which was established on 21 June 2006 by an agreement between the General Partner and Magnus Goodlad. Pursuant to a supplemental limited partnership agreement dated 5 July 2006 Magnus Goodlad transferred his entire interest as a limited partner to the Founding partner. The Founding Partner has made a capital contribution of £772,475 to the IP Venture Fund. IP Group has subscribed for 3.09 participations in the IP Venture Fund, amounting to a total of £3,090,000. Each of the investors in the IP Venture Fund is required to advance loans pro rate their number of participations held up to an aggregate amount of £999,990 in respect of each participation subscribed by it.

IP Venture Fund was established by Top Technology Ventures Limited ("TTVL") on 21 June 2006 to carry on the business of identifying, making, monitoring and realising investments in venture capital opportunities. The 2007 agreement amends and supersedes the original 2006 agreement such that the purpose of the IP Venture Fund is to carry on the business of an investor and to identify, research and negotiate investment opportunities and make and monitor the progress of and arrange the sale of investments (which include, but are not limited to, the purchase, acquisition, sale and disposal of ordinary shares, preference shares of venture capital transactions) with the principal objective of providing investors (as limited partners in the IP Venture Fund) with a high overall rate of return by means of both income and capital. The IP Venture Fund will not make any investment in venture capital or private equity funds or any other pooled investment vehicle.

The responsibility for the operation of the IP Venture Fund is vested exclusively in the General Partner, who may appoint a manager to operate the IP Venture Fund and manage its investment portfolio on a discretionary basis. All of the income of the partners will be distributed to them at such times as the General Partner in its discretion decides. Distributions of a capital nature shall be made as soon as practicable after the relevant amount becomes available for distribution and in any event no later than two months after receipt by the IP Venture Fund.

The term of the IP Venture Fund shall continue until the earlier of the expiration of ten years from the final closing date (as defined in the agreement) or 18 December 2017 although the life of the IP Venture Fund may be extended at any time prior to these dates by the election of the General Partner and unanimous written consent of all investors, by a period or consecutive periods not exceeding two years in aggregate.

The General Partner may not resign during the term of the IP Venture Fund unless the investors provide their consent. The limited partnership agreement shall terminate upon the happening of any of the following events:

• (a) the bankruptcy, insolvency, dissolution or liquidation of the General Partner (save where the Partnership may be reconstituted pursuant to the agreement);
• (b) the agreement to such termination of the General Partner and investors;
• (c) the resignation or removal of the General Partner (save where the limited partnership may be reconstituted pursuant to the agreement);
• (d) the limited partnership ceasing to be fiscally transparent in the UK or the General Partner determining that it is illegal for the limited partnership to continue; or
• (e) all the assets of the limited partnership are disposed of and there is no ability to make new investments.

15.12.2 Management Agreement

Pursuant to a management agreement dated 6 July 2006 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) Top Technology Ventures Limited (the "Manager"), the parties agreed that the Manager will act as a discretionary manager of the IP Venture Fund so as to enable the General Partner to fulfil its obligations under the limited partnership agreement as detailed above.

The Manager's responsibilities under the agreement include sourcing, evaluating and negotiating investment opportunities, monitoring investments and participating in the management of the businesses in which the IP Venture Fund had invested and arranging for the realisation of investments.

Under the agreement, the Manager is required to exercise such degree of care and diligence as a prudent investment manager would reasonably be expected to exercise in the selection and management of the IP Venture Fund's portfolio of investments.

The management agreement may be terminated with immediate effect by either party by written notice to the other provided that the Manager shall not be entitled to terminate the agreement while the General Partner is the general partner of the IP Venture Fund. The agreement shall terminate on the happening of any of the following events:

• (a) the termination of the IP Venture Fund;
• (b) the removal or withdrawal of the General Partner as general partner of the IP Venture Fund unless the General Partner is replaces by an associate;
• (c) the Manager ceasing to be authorised under FSMA to manage or operate the IP Venture Fund or to act as manager of the IP Venture Fund's investment portfolio;
• (d) the Manager committing a material breach of its obligations (including if the breach is capable of being remedied and the Manager fails to remedy the same within 20 business days after service of notice); or
• (e) the insolvency, dissolution of liquidation of the Manager.

The Manager shall be entitled to be paid by the General Partner 100 per cent. of the amounts the General Partner receives from the IP Venture Fund. In addition, the Manager shall be entitled to accept and retain all syndication fees, corporate finance fees, any other transaction fees, directors' fees and management fees earned and received by it from the company in which the IP Venture Fund has invested or from third party investors.

The Manager shall be free to render similar services to third parties, subject to the provision of services to the IP Venture Fund not being materially adversely affected thereby.

15.13 Summary of agreements relating to The North East Technology Fund L.P.

15.13.1 Limited Partnership Agreement (December 2009)

Pursuant to a limited partnership agreement dated 22 December 2009 between (1) IP Europe (GP) Limited (the "General Partner") and (2) Magnus Goodlad ("MG"), the parties agreed to form The North East Technology Fund LP to carry on the business of making investments, with a view to producing profits for distribution.

Under the agreement, the partnership shall continue in existence, notwithstanding any change in its composition and further persons may be admitted as limited partners at any time with the prior written consent of the General Partner.

The General Partner and MG agreed to contribute £1.00 each to the capital of the partnership and any further persons admitted as limited partners will contribute such amount of capital as the General Partner specifies on the date of their admission to the partnership.

The General Partner is responsible, under the agreement, for ensuring that the partnership is always managed and operated by a person who is authorised under part IV of FSMA. The limited partner, MG, shall take no part in the operation of the partnership or the management or control of its business and affairs.

The profits of the partnership are distributed in the following order:

• (a) payment of expenses and liabilities of the partnership;
• (b) payment of £1,000 annually to the General Partner as a priority profit share; and
• (c) the balance, if any, shall be allocated to the limited partners pro rata in proportion to their capital contributions.

The partnership shall terminate upon the happening of any of the following events:

• (a) if all partners unanimously agree in writing that the partnership should so terminate; or
• (b) if an order is made by the courts, or an effective resolution is passed for, the liquidation, winding-up or administration of the General Partner.

The limited partner is not permitted to sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its interest in the partnership unless it has obtained prior written approval of the General Partner and the transferee first agreeing to be bound by the terms of the agreement.

15.13.2 Limited Partnership Agreement (January 2010)

Pursuant to a limited partnership agreement dated 6 January 2010 between (1) IP Ventures (Scotland) Limited (the "General Partner") and (2) Magnus Goodlad ("MG"), the parties agreed to establish the North East Technology (FP) LP (the "FP Partnership") to carry on the business of participating in other limited partnership and making investments, with a view to producing profits for distribution.

Under the agreement, the FP Partnership shall continue in existence, notwithstanding any change in its composition and further persons may be admitted as limited partners at any time with the prior written consent of the General Partner.

The General Partner and MG agreed to contribute £1.00 each to the capital of the FP Partnership and any further persons admitted as limited partners will contribute such amount of capital as the General Partner specifies on the date of their admission to the FP Partnership.

The General Partner is responsible, under the agreement, for ensuring that the FP Partnership is always managed and operated in accordance with Scots law. The limited partners, including the initial limited partner MG, shall take no part in the operation of the FP Partnership or the management or control of its business and affairs nor engage in any transactions on behalf of the FP Partnership. No limited partner shall have the right to:

• (a) withdraw or reduce its capital contribution;
• (b) bring an action for partition against the FP Partnership; or
• (c) cause the termination of the FP Partnership

except as otherwise stated in the partnership agreement.

The profits of the FP Partnership are distributed in the following order:

• (a) payment of expenses and liabilities of the FP Partnership;
• (b) payment to the General Partner the lower of: (i) £100 per annum; and (ii) five per cent. of the profits of the FP Partnership (and any other sums available for distribution per annum) as a priority profit share; and
• (c) the balance, if any, shall be allocated to the limited partners pro rata in proportion to their capital contributions.

The FP Partnership shall terminate upon the happening of any of the following events:

• (a) if all partners unanimously agree in writing that the FP Partnership should so terminate; or
• (b) if an order is made by the courts, or an effective resolution is passed for, the liquidation, winding-up or administration of the General Partner.

The limited partner is not permitted to sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its interest in the FP Partnership unless it has obtained prior written approval of the General Partner and the transferee first agreeing to be bound by the terms of the partnership agreement.

15.13.3 Limited Partnership Agreement 2010

Pursuant to a limited partnership agreement ("LPA") dated 31 March 2010 between (1) North East Technology (GP) Limited ("General Partner"), (2) the North East Technology Fund (FP) LP ("Carried Interest Partner") and (3) North East Finance (Holdco) Limited ("Investor"), the parties agreed to form a limited partnership, the North East Technology Fund LP (the "NETF"), to carry on the business of identifying, negotiating, making, monitoring and realising investments.

The Carried Interest Partner contributed £20 and the Investor contributed £80 to the capital of the NETF, which shall only be repaid on the termination or liquidation of the NETF. The maximum size of the NETF is £35 million and it will invest in the general technology sector, with particular focus in energy, process technologies and health sciences and healthcare.

The investment targets for the NETF under the LPA include the following:

• (a) to invest in at least 60 companies in the five years to 31 December 2014, with the average investment size of the fund to be approximately £415,000; and
• (b) to generate at least the following annual cash receipts from investments:
• (i) Year 1: £0;
• (ii) Year 2: £700,000;
• (iii) Year 3: £1,000,000;
• (iv) Year 4: £1,350,000;
• (v) Year 5: £3,000,000.

The output targets for the NETF under the LPA include the following:

• (a) 900 new jobs created;
• (b) 550 jobs safeguarded;

• (c) £35 million private sector funds leveraged by the Fund in total;

• (d) 9 new start-up Small and Medium sized Enterprises ("SMEs") assisted; and

• (e) 51 existing SMEs assisted.

The Manager of the NETF is Top Technology Ventures Limited. The investment period under the LPA ends on 31 December 2014 although it may be extended with the Investor's consent. The Manager is responsible for the management and operation of the partnership and shall manage all investments, money, assets or borrowings of the partnership on a discretionary basis.

All net income of the NETF and all realisations of capital in respect of each investment shall be applied in the following order of priority:

• (a) in repaying the investment loan (up to £25,000,000) to the Investor;
• (b) in repaying the management loan (up to £4,065,000) to the Investor;
• (c) in the repayment of the General Partner's share (as set out in the LPA), any interestfree loan and any repayment of contributions;
• (d) in paying the preferred return (as defined in the LPA) to the Investor;
• (e) in paying the Carried Interest Partner an amount equal to 25 per cent. of the preferred return;
• (f) in paying any further sums to the Investor and the Carried Interest Partner such that the balance on their respective income accounts after such payments are pro rata to their respective capital contributions; and
• (g) finally in repayment of the capital contribution accounts of the Investor and the Carried Interest Partner.

The General Partner may not resign as a general partner during the period of 12 months from the date of the LPA and thereafter may not resign without the approval of the Investor and by giving 12 months' notice in writing to each limited partner.

The partnership shall not be terminated by the death, bankruptcy, insolvency, dissolution or liquidation of a limited partner or Carried Interest Partner. The partnership shall terminate on the tenth anniversary of the date of the LPA or upon the happening of any of the following events:

• (a) bankruptcy, insolvency, dissolution or liquidation of the General Partner (save that the partnership may be reconstituted pursuant to the LPA);
• (b) the agreement as to such termination of the General Partner and of the Investors;
• (c) the resignation or removal of the General Partner (save that the partnership may be reconstituted pursuant to the LPA);
• (d) the Investor determining that the partnership should be terminated;
• (e) notice sent by the General Partner to the limited partners or by the Investor to the General Partner following any change in the law as a result of which the continuation of the partnership becomes unlawful or impracticable or inadvisable; or
• (f) the partnership ceasing to be fiscally transparent in the UK.

The life of the partnership may be extended at any time prior to the tenth anniversary of the date of the LPA by the election of the General Partner and the Investor by a period (or consecutive periods) not exceeding two years in aggregate. If the partnership is terminated, it may be reconstituted and its business continued pursuant to the unanimous written consent of all Limited Partners electing to continue the partnership and electing a new General Partner.

The LPA includes certain indemnities for the General Partner and the Manager as well as investment and operational guidelines.

15.13.4 Fund Management Agreement 2010

Pursuant to a fund management agreement ("FMA") dated 31 March 2010 between (1) the North East Technology Fund LP ("NETF") and (2) Top Technology Ventures Limited ("TTVL"), TTVL was appointed as the investment manager of the NETF to identify, negotiate and make investments and to monitor and dispose of otherwise realise investments and to act as operator of the NETF under the terms of the FMA. TTVL was also appointed to carry on the regulated activity of operating an unregulated collective investment scheme in respect of the NETF. TTVL provides standard warranties under the FMA, which also includes certain indemnities.

The objective of the NETF is to invest in technology companies at any stage of their development or maturity. The NETF is expected to make equity investments and to seek to maximise co-investment with privately funded co-investors, to stimulate interest among business angel investors and privately funded venture capital institutions in the investment opportunities in the North East region. The manager is required to use its reasonable endeavours to invest the aggregate amount available for drawdown and investments by the NETF (£25,000,000) to achieve the objectives of the NETF and outputs specified in the LPA as detailed in paragraph 15.13.3 above and the business plan.

TTVL is required to devote such time and have all necessary competent personnel and equipment as may be required to enable it to carry out its obligations properly and efficiently, with a view to:

• (a) maximise the returns while minimising the operational costs and the costs to investee companies and businesses;
• (b) maximising the additional investment made by private sector co-investors into investee companies and businesses;
• (c) managing the investment portfolio to add value to investee companies and businesses and achieving profitable exists for the NETF;
• (d) encouraging further expansion in the North East region of indigenous SMEs;
• (e) attracting new SMEs to the North East region;
• (f) creating an environment to encourage more start-ups;
• (g) assisting the development of new products and processes through to commercial exploitation;
• (h) assisting businesses in achieving world-class company status; and
• (i) supporting and encouraging management of existing SMEs.

TTVL shall be entitled to be paid such fee as may (from time to time) be agreed between the General Partner and the manager, not exceeding the General Partner's share. For the period 2010 to 2014, the General Partner's share is 3.25 per cent. per annum of £25,000,000 available for drawdown by the partnership.

The provision of services by TTVL under the FMA is not exclusive and TTVL shall be free to render the same or similar services to others. The NETF may engage other persons to provide it with services similar to those provided by TTVL.

TTVL shall at all times act in the best interests of the NETF, so far as is practicable having regard to its obligations to other clients. Where a proposed transaction by the NETF represents a material conflict of interest between the interests of TTVL, its associates or their other clients and the interests of the Fund, TTVL shall disclose the same to the Fund.

Under the FMA, the manager is eligible to participate in a discretionary bonus scheme introduced to incentivise the manager to exceed the mandatory outputs and target outputs of the NETF as further detailed in the LPA.

Either party may terminate the FMA on six months' prior written notice to the other. The NETF may terminate the FMA by notice to TTVL in certain circumstances, including if:

• (a) TTVL commits a material breach of the FMA which cannot be remedied;
• (b) TTVL commits a breach of the FMA which can be remedied but fails to remedy the breach within 20 business days or receipt of written notice;
• (c) TTVL has a receive, administrator or provisional liquidator appointed or passes a resolution for its winding up;
• (d) TTVL ceases or threatens to cease to trade;
• (e) TTVL experiences a change in control which has not been approved in writing by the North East Finance (Holdco) Limited; or
• (f) North East Finance (Holdco) Limited notifies the fund that it has reasonable grounds for suspecting fraud or dishonesty on the part of TTVL or any of its officers, employees agents or sub-contractors.

The FMA and the appointment of TTVL shall terminate immediately on the happening of any of the following events:

• (a) termination of TTVL's appointment by mutual agreement between the NETF and TTVL;
• (b) the General Partner ceasing for any reason to be a general partner of the NETF;
• (c) the termination of the NETF; or
• (d) upon the written notice issued by North East Finance (Holdco) Limited to TTVL confirming the termination of the FMA.

15.13.5 Limited Liability Partnership Agreement relating to Technikos LLP

Pursuant to a limited liability partnership agreement dated 16 June 2006 between (1) Technikos LLP, (2) SRPE LLP and (3) persons listed in the agreement ("Members"), the parties entered into the agreement to govern the mutual rights and duties of Technikos LLP and the present, and future, Members from time to time. On 13 January 2011, the Company acquired an A membership share in Technikos LLP from an outgoing limited partner and, accordingly, became a Member for the purposes of the limited liability partnership agreement and the rights accruing to each of the limited partners thereunder.

The principal purpose of Technikos LLP is the carrying on of the business of negotiating, making, monitoring and realising investments in accordance with the investment policy. The commercial intention of the Members was that shares in Technikos LLP or another corporate entity to which all or substantially all of the investments are transferred are to be listed on the London Stock Exchange, the Alternative Investment Market or another recognised exchange by 2009.

SRPE LLP agreed to act as Managing Member and operator of Technikos LLP so long as it is appropriately authorised by the FCA. After the second anniversary of the final closing date (as defined in the agreement) Members holding at least 75 per cent. of the voting interests of all members may, by written resolution, remove the Managing Member as a member of Technikos LLP and terminate its appointment as Managing Member. In such circumstances, the Managing Member shall be entitled to compensation for termination of its appointment as set out in the agreement. The Managing Member may be removed at any time without compensation for termination of office if such termination is as a result of the Managing Member's gross negligence, fraud, wilful misconduct, bad faith or reckless disregards of its obligations and duties as managing member of Technikos LLP. In August 2010, the relevant proportion of the Members approved the appointment of Burnahyll LLP as Managing Member in place of SRPE LLP.

Cash representing profits of Technikos LLP shall be distributed in the following order of priority (after payment of all expenses and liabilities of Technikos LLP):

• (a) first, in payment of any C Member's share;
• (b) second, in payment of any amounts as may have been agreed to be paid to any Member by way of drawings;
• (c) third, to the Members in repayment of their drawn commitments in the relevant proportions; and
• (d) fourth, as to the remaining balance 8 per cent. to the B Members in the proportions allocated to each B Member and as to 92 per cent. to the investors in their commitment proportions.

Technikos LLP shall terminate on the twentieth anniversary of the final closing date or shall terminate prior to such date upon the happening of any of the following events:

• (a) the agreement to such termination by the unanimous written consent of all the Members who are investors; or
• (b) the completion of sale of all of the investments and distributions to Members of profits and capital in accordance with the LLP agreement.

The life of Technikos LLP may be extended prior to twentieth anniversary of the final closing date by a Members' resolution of 60 per cent. of the voting interests of the founder Members (acting on the recommendation of Technikos LLP) by up to two one year periods to such later date not exceeding 22 years from the final closing date. Technikos LLP may be terminated at any time prior to the twentieth anniversary of the final closing date and at yearly intervals thereafter (acting on the recommendation of Technikos LLP) by Members' written resolution of 60 per cent. of the voting interests of the founder Members.

If Technikos LLP is terminated, it may be reconstituted and its business continued pursuant to the unanimous written consent of Members who are investors electing to continue Technikos LLP.

15.14 Summary of agreements relating to the University of Manchester

15.14.1 Summary of the proof of principle fund agreement relating to the University of Manchester

Pursuant to an agreement relating to a proof of principle fund dated 25 February 2013 and made between (1) The University of Manchester ("UOM"), (2) The University of Manchester 13 Limited ("UMI3") and (3) IP2IPO Limited, the parties agreed certain arrangements with regard to the creation and operation of a proof of principle fund. Broadly summarised, these arrangements entitle IP2IPO Limited to fund proof of principle projects (the "UOM Projects") offered by UOM and/or UMI3 in specific technology areas such as set out below. IP2IPO Limited will be entitled to an equity share in each spin-out company formed by UOM and/or UMI3 from a UOM Project funded by IP2IPO Limited.

The principal provisions of the agreement are as follows:

• (a) IP2IPO Limited shall provide funding for UOM Projects offered by UOM and/or UMI3 in the following technology areas:
• (i) materials and clean technology;
• (ii) all non-therapeutic life, medical and human sciences technologies and information technology;
• (iii) electronics and communications; and
• (iv) any other areas agreed by the parties in writing.

Whilst the agreement provided that IP2IPO Limited shall have no right to fund any UOM Projects in the area of graphene technology (all matters relating to graphene and other so termed 2-D materials technology) unless UOM elects to discuss any such project with IP2IPO Limited, it was subsequently expanded to include graphene pursuant to the Variation Agreement summarised in paragraph 15.14.2 below.

• (b) IP2IPO Limited has agreed to invest the following amounts in UOM Projects (other than in the area of graphene technology):
• (1) IP2IPO Limited has agreed to fund UOM Projects up to an aggregate funding commitment of £5,000,000 to be applied over a maximum period of 5 years from the Effective Date (being 25 September 2013) and with a maximum amount to be committed towards UOM Projects on a per annum basis of £1,000,000;
• (2) IP2IPO Limited is entitled to reduce its funding commitment by up to £2,500,000, to no less than £2,500,000, in the event that IP2IPO Limited sources a matching funder or funders which are acceptable to UOM and agree to fund such amount; and
• (3) UOM is entitled to continue to seek an additional third party funder or funders (subject to certain restrictions) to provide funding of up to a maximum of £2,500,000 for a period of up to 5 years, in which event such funder(s) would fund UOM Projects on an equal basis with IP2IPO Limited;
• (c) Subject to the Investment Committee's prior approval, UOM is entitled to fund in cash, either itself or through a non-commercial funder, up to fifty per cent. of the required funding for each UOM Project, provided that such entitlement may be reduced by the Investment Committee in the event that UOM has secured wider matched funding from third parties;
• (d) Investment decisions in relation to funding UOM Projects will be made by the Investment Committee by a simple majority vote. The Investment Committee comprises two persons nominated by IP2IPO Limited, one person nominated by UOM, one person nominated by UMI3 and an independent chairperson appointed unanimously by the other members of the investment committee. All members shall have one vote with the chairperson having no second or casting vote. It has been agreed that no UOM Project shall be put forward for formal approval at the Investment Committee for funding unless it has first been considered by IP2IPO Limited's investment committee.
• (e) IP2IPO Limited is entitled to an equity stake in each spin-out company funded by it on such terms as are agreed between the parties and in accordance with UOM's IP policy from time to time. The UOM policy as at the Effective Date provides that funders contributing £95,000 (or less) would be entitled to receive 15 per cent. of the equity,

and funders contributing £140,000 (or greater) would be entitled to receive 30 per cent. of the equity, in the relevant spin-out company, with a sliding scale in between;

• (f) IP2IPO Limited has an option, but is not obliged, to provide further funding to a spinout company beyond initial proof of principle funding, to act as the lead investor, and (subject to agreement of terms), arranger, of extended proof of principle funding. Any such funding is to be made at a valuation for the relevant spin-out company to be agreed amongst the parties and the relevant spin-out company at the relevant time, Where no such agreement is reached, third party funding may be sought, provided that (i) such third party funding shall be on no less favourable terms than those which were offered by IP2IPO Limited; or (ii) before accepting any third party funding where the terms are more favourable than those which were offered by IP2IPO Limited, IP2IPO Limited shall be given the opportunity for a defined period to invest on such more favourable terms;
• (g) A steering committee that comprise two representatives of each of the parties at a senior level shall be established and maintained in order to review the proper operation of the agreement and to recommend any modifications and amendments to it;
• (h) Subject to certain specified exceptions, UOM and UMI3 each undertake to IP2IPO Limited that they will not enter into any agreement or arrangement with any third party regarding the provision of proof of principle funding for spin-out company propositions which gives rise to a material conflict with the intent and objectives of this agreement;
• (i) The agreement may be terminated:
• (i) on the date falling one month after IP2IPO Limited shall have made its final cash commitment to a UOM Project, provided that such agreement has not been renewed;
• (ii) immediately by notice in writing by either party if:
  • (1) the parties agree to do so; or
  • (2) either party or any member of that party's group are in material irremediable breach of any of its obligations under the agreement and, in any such case (in relation to any breach which is capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or
  • (3) that party is subject to an insolvency event;
• (iii) by six months' notice served by either party if, by not earlier than third anniversary of the Effective Date and not later than 30 days thereafter in the event that by the third anniversary of the Effective Date:
  • (1) the investment committee of IP2IPO Limited has not approved at least fifteen UOM Projects for funding by IP2IPO Limited under the agreement; or
  • (2) IP2IPO Limited has not deployed at least half of the funds it has committed to UOM Projects either annually against the applicable annual targets in each of the first three years or in aggregate as required during the said three year period.
• (j) Each party has agreed to indemnify the other against all and any costs, claims, liabilities or proceedings brought by any third party, or incurred, as a result of a breach

of this agreement or the default, negligence or breach of duty or responsibility by that party, subject to certain financial limitations.

15.14.2 Summary of the variation agreement regarding proof of principle fund agreement relating to the University of Manchester

• (a) Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the original Manchester IP commercialisation agreement which, in the event of a direct conflict, prevail over the terms of the original agreement with effect from the date of the Variation Agreement.
• (b) The principal provisions of the Variation Agreement are as follows:
• (i) the scope of the original POP fund agreement is widened to include graphene and other 2-D materials; IP2IPO Limited shall provide funding in the following technology areas: (1) clean/environmental technology, (2) all non-therapeutic life, medical and human sciences technologies and information technology, (3) electronics and communications, (4) advanced materials including, without limitation, grapheme and other two dimensional and/or nanoscale materials; and (5) any other areas agreed by the parties in writing;
• (ii) parties agree that graphene projects may be sourced by UMI3 both from within UOM and beyond and that each such graphene project shall be offered to IP2IPO for investment as follows:
  • (1) during the regional growth fund period commencing on 11 July 2013 and ending on 31 May 2015 and only after the party appointed to manage the investment from the Regional Grow fund Round 4, presently Greater Manchester Combined Authority (GMCA), has received its grant from the Regional Grow Fund Round 4 (if at all), IP2IPO shall be offered the right to coinvest on a pari passu basis alongside the regional growth fund managed fund in graphene projects which have already been approved for investment by UMI3 and/or by a spin-out panel constituted by UMI3 for this purpose; in the event the grant as aforementioned is never received, IP2IPO shall be offered the right to invest in all graphene projects in accordance with the proof of principle agreement described in paragraph 15.14.1 above; and
  • (2) during the period on and from the end of the regional growth fund funding period and ending on the date which is 5 years from the date of the Variation Agreement, all graphene projects shall be offered to IP2IPO Limited for investment in accordance with the provisions of the proof of principle agreement as described in 15.14.1 above.
• (iii) given this increase in the scope of the original POP fund agreement, IP2IPO shall attempt to seek to increase its aggregate funding commitment under the original POP funding agreement from £5 million to up to £7.5 million within an agreed time period.
• (iv) in case the additional commitment is not made by the 30 June 2014, UMI3 shall be entitled to, upon service of at least 60' days written notice by UMI3 on IP2IPO not later than 30 days after the 30 June 2014, require that the Technology Areas clause be amended so as to remove any rights which IP2IPO may have under the variation agreement to fund graphene projects. This right shall be without prejudice to (i) any graphene project that has been funded prior to the receipt of such notice in respect of which the provisions of the agreement will continue to apply and (ii) the remaining provisions of the agreement which

shall continue to be in full force and effect save where the same require variation to give effect to the terms of the notice.

15.15 Summary of agreements relating to the IP Venture Fund II L.P.

15.15.1 Limited Partnership Agreement

Pursuant to a limited partnership agreement (the "LPA") dated 21 May 2013 between (1) IP Venture Fund II (GP) LLP (the "General Partner") and (2) IP2IPO Limited (the "Initial Limited Partner"), the parties agreed certain changes to the IP Venture Fund II L.P ("IP Venture Fund II" or the "Partnership") which was established on 1 May 2013 by an original agreement between the General Partner and the Initial Limited Partner.

IP Venture Fund II was established by Top Technology Ventures Limited on 1 May 2013 to carry on the business of identifying, making, monitoring and realising investments in venture capital opportunities. The 21 May 2013 agreement amends and supersedes the original 1 May 2013 agreement such that the purpose of the IP Venture Fund II is to carry on the business of an investor and in particular but without limitation to identify, research and negotiate investment opportunities and make and monitor the progress of and arrange the sale of investments (which include, but are not limited to, the purchase, acquisition, sale and disposal of ordinary shares, preference shares and subordinated loan stocks of venture capital transactions) with the principal objective of providing investors with a high overall rate of return by means of both income and capital. It is agreed that no more than 15 per cent. of the total commitments can be used to acquire investments in any one investee company (including any follow-on investments) and that the Partnership is not allowed to make loans to portfolio companies in an aggregate amount at any time greater than 20 per cent. of total commitments (excluding loans to portfolio companies which are linked to equity funding of an investee company or which take the form of convertible loan stock or similar instruments which are convertible to equity share capital in accordance with their terms of issue). It is also agreed that the IP Venture Fund II will not make any investment in venture capital or private equity funds or any other pooled investment vehicle.

IP Group (or any associate thereof) agreed to subscribe on the date on which the first investor is admitted as a limited partner to the Partnership for a commitment of £10,000,000. Any further persons admitted as limited partners and investors must subscribe for a minimum commitment of £1,000,000 (or such lesser amount as the General Partner may agree). Each investor agreed to contribute 0.001 per cent. of its commitment to the capital of the Partnership. Each of the investors in the IP Venture Fund II are required to advance loans to the Partnership pro rata to the commitment held by it up to an aggregate amount equal to 99.999 per cent. of the commitment subscribed by it.

The responsibility for the operation of the IP Venture Fund II is vested exclusively in the General Partner, who ensures that the Partnership is always managed and operated, and that its investment portfolio is always managed on a discretionary basis under the supervision and authority of the General Partner, by an entity who is authorised to do so under the FSMA. The General Partner may appoint a manager to operate the IP Venture Fund II and manage its investment portfolio on a discretionary basis. The limited partners shall take no part in the operation of the Partnership or the management or control of its business and affairs.

All net income of the Partnership and all realisations of capital in respect of each investment shall be applied in the following order of priority:

• (a) in repaying ongoing expenses (as defined in the LPA);
• (b) in the repayment of the General Partner's share (as set out in the LPA), any interestfree loan and any repayment of contributions;

Thereafter, all cash and any Partnership assets distributed in specie shall be applied:

• (a) in repaying the loan (or tranches thereof) to the investors pro rata to the amount of such loans (or tranche(s)) outstanding to such investors;
• (b) in paying any further sums to the investors such that the balance on their respective current accounts after such payments are pro rata to their respective capital contributions; and
• (c) finally in repayment of the capital contribution accounts of the investor on termination or liquidation of the Partnership.

Subject to these provisions, all of the income of the General Partner and/or all or any of the limited partners, as the case may require, will be distributed to them at such times as the General Partner in its discretion decides. Distributions of a capital nature shall be made as soon as practicable after the relevant amount becomes available for distribution and in any event no later than two months after receipt by the Partnership.

The General Partner may not resign as a general partner during the term of the Partnership un less first consented to by an investor's special consent.

The Partnership shall not be terminated by the death, bankruptcy, insolvency, dissolution or liquidation of a limited partner. The term of the IP Venture Fund II shall continue until the expiration of ten years from the final closing date (as defined in the LPA) although the life of the IP Venture Fund II may be extended at any time prior to this date by the election of the General Partner and the Investors acting by an Investors' Special Consent (as defined in the LPA) by a period or consecutive periods not exceeding two years in aggregate.

The Partnership shall terminate upon the happening of any of the following events:

• (a) the bankruptcy, insolvency, dissolution or liquidation of the General Partner (save where the Partnership may be reconstituted pursuant to the LPA);
• (b) the agreement to such termination of the General Partner and investors;
• (c) the resignation or removal of the General Partner (save where the limited partnership may be reconstituted pursuant to the LPA);
• (d) the limited partnership ceasing to be fiscally transparent in the UK or the General Partner determining that it is illegal for the limited partnership to continue; or
• (e) all the assets of the Partnership are disposed of and there is no ability to make new investments.

The General Partner shall not sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its rights and obligations as a general partner, or voluntarily withdraw as the General Partner of the Partnership without the sanction of an Investors' Special consent except that the General Partner may transfer its rights and obligations in the Partnership to an associate (as defined in the LPA) without requiring such consent.

No transfer of any investor's interest in the Partnership is valid or effective except with the consent of the General Partner which may be withhold if specific conditions such as set out in the LPA are met.

The LPA includes certain indemnities for the General Partner and the Manager as well as investment and operational guidelines.

If IP Venture Fund II is terminated, it may be reconstituted and its business continued pursuant to an investor's special consent electing to continue the Partnership and electing a new General Partner.

Pursuant to a side letter dated 1 May 2013 between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) European Investment Fund, the LPA has been amended (such as set out below) with respect to the commitment of European Investment Fund as limited partner and investor of the Partnership.

15.15.2 Subscription Agreement for IP Venture Fund II L.P.

Pursuant to a subscription agreement dated 22 May 2013 between (1) IP Venture Fund II (GP) LLP and (2) European Investment Fund (the "EIF"), the parties agreed that EIF will subscribe for a commitment of £ 20,000,000 and become a limited partner and investor under the LPA of IP Venture Fund II, subject to the provisions of the side letter dated 1 May 2013 between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) EIF (such as set out below).

15.15.3 Side Letter regarding the European Investment Fund investment

Pursuant to a side letter dated 1 May 2013 and made between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) European Investment Fund (the ("EIF"), the parties agreed the following principal points as follows:

• (a) EIF's commitment is due at a time when (i) the total commitments of the investors in IP Venture Fund II equal at such a date at least £30,000,000 and (ii) all registrations, licences, approvals and consents that are necessary for the establishment and carrying on the business of the Partnership have been obtained;
• (b) EIF is entitled to appoint one person to the investors' advisory committee of IP Venture Fund II, such seat being maintained for as long as EIF remains an investor in the IP Venture Fund II;
• (c) EIF is authorised to transfer its commitment or interest in IP Venture Fund II to the European Investment Bank and the General Manager will not withhold its consent to the transfer. This transfer is not subject to a right of first refusal by the other investors provided that any transfer complies with all applicable anti-money laundering requirements that are in place;
• (d) EIF's investment shall rank pari passu with market oriented investors investing in the IP Venture Fund II and such pari passu rank is to be reflected in the LPA;
• (e) Confirmation by IP Venture Fund II (GP) Limited that the majority of the capital being invested in portfolio companies under the co-investment arrangements between IP Group and IP Venture Capital II is provided by an entity operating in circumstances corresponding to the market economy investor principle;
• (f) IP Venture Fund II (GP) Limited undertakes that EIF's indirect participation in any portfolio company shall not exceed 25 per cent of the total shareholding in any such portfolio company;
• (g) No distribution in specie will be made to EIF unless prior notice to the contrary;
• (h) No changes to the investment policy of the partnership shall be made without prior written consent of EIF.

The parties further agree that the provisions of this letter will prevail in the event of conflict between the provisions of the LPA and/or Subscription Agreement and the provisions of this letter.

15.15.4 Management Agreement

Pursuant to a management agreement dated 21 May 2013 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) Top Technology Ventures Limited (the "Manager"), the parties agreed that the Manager will act as a discretionary manager of the IP Venture Fund II so as to enable the General Partner to fulfil its obligations under the LPA as detailed above.

The Manager's responsibilities under the agreement include sourcing, evaluating and negotiating investment opportunities, monitoring investments, evaluating, negotiating and arranging for the realisation of investments and preparing the reports and accounts of the Partnership in accordance with the provisions of the LPA.

Neither the Manager nor its officers, directors, shareholders, agents, partners or employees shall have any liability for any loss to IP Venture Fund II or the partners arising in connection with the services to be performed hereunder or pursuant hereto, save in respect of any matter resulting from such person's fraud, wilful misconduct, bad faith or reckless disregard for its obligations and duties in relation to IP Venture Fund II, or its gross negligence, or, in the case of the Manager, for any breach of any rules of the FCA or any provision of FSMA binding upon it.

Under the agreement, the Manager is required to exercise such degree of care and diligence as a prudent investment manager would reasonably be expected to exercise in the selection and management of the IP Venture Fund's II portfolio of investments.

The management agreement may be terminated with immediate effect by either party by written notice to the other. The agreement shall terminate on the happening of any of the following events:

• (a) the removal or withdrawal of the General Partner as general partner of the IP Venture Fund II unless the General Partner is replaces by an associate (as this term is defined under the LPA);
• (b) the termination of the IP Venture Fund II;
• (c) the Manager ceasing to be authorised under FSMA to manage or operate the IP Venture Fund II or to act as manager of the IP Venture Fund's II investment portfolio;
• (d) the insolvency, dissolution of liquidation of the Manager; or
• (e) the General Partner deciding, on behalf of IP Venture Fund II, to terminate the management agreement and notifying the Manager of such decision.

The Manager shall be entitled to be paid by the General Partner such fee as may from time to time be agreed between the General Partner and the Manager.

The Manager shall be free to render similar services to third parties, subject to the provision of services to the IP Venture Fund II not being materially adversely affected thereby.

15.15.5 Deed of variation of the LPA

Pursuant to a deed of variation dated 21 November 2013 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) IP2IPO Limited (the "Initial Limited Partner"), the parties agreed certain variations, clarifications and supplemental terms to the limited partnership agreement (the "LPA") dated 21 May 2013 (the "Original Agreement").

The principal provisions of the deed of variation are as follows:

(a) an additional possibility of drawings by the General Partner is introduced entitling the General Partner to make drawings out of the Partnerships (i) on the date of submission of the first Drawdown Notice in respect of an investment to be made in a Relevant Investee Company (the "Agreed Fee Drawdown Date"), on account of fifty per cent. (50 per cent.) of the Agreed Fee; and (ii) on the date which is the earlier of (i) 6 months form the Agreed Fee Drawdown Date or (ii) the Last Completion Date, on account of the remaining fifty per cent. (50 per cent.) of the Agreed Fee not drawn down pursuant to (i) above. The terms of the deed of variation to be:

• (i) "Agreed Fee" meaning £402,739.73, being the amount equivalent to what the General Partner's share of Net Income and Capital Gains would have been under Clause 6.3.1 assuming the same had been accruing during the Agreed Period;
• (ii) "Agreed Period" means the period commencing on the Effective Date and ending on the First Closing Date (being 22 May 2013);
• (iii) "Effective Date" means 1 August 2012;
• (iv) "Last Completion Date" means the date of legal completion of the last transfer of a Relevant Investee Company to the Fund (excluding, for these purposes, any Relevant Investee Company or Companies which, despite all reasonable efforts, the Group and/or its Associates are unable to procure the transfer to the Fund of the same as a result of circumstances beyond their control); and
• (v) "Relevant Investee Companies" means those companies which have been first invested in by the Initial Limited Partner (whether by way of convertible loan or subscription for equity) during the Agreed Period and which, immediately prior to such first investment, would have fallen within the Investment Policy of the Fund, being Medaphor Limited, Cryptographiq Limited, Clyde Biosciences Limited, Azuri Technologies Limited, Magnomatics Limited, Oxehealth Limited, Magnetometer Limited, Ubiquigent Limited, Leeds Label Free Detection Limited and Fault Current Limited.
• (b) one of the investment policies set out in Schedule III of the LPA regarding the fact that the Fund shall only invest in Investee Companies which are not companies in which IP Group, IP Venture Fund I ("IPVF I") or any of their Associates have invested in, at the time of the First Closing Date, shall not apply so that Investments by the Fund Relevant Investee Companies shall be allowed;
• (c) the words "First Closing Date" are replaced by the words "Effective Date" in some specific clauses of the LPA.

15.15.6 Investors' Special Consent

Investors' Special Consent and General Partner Consent letters have been granted in respect of the deed of variation of the LPA on 21 November 2013.

15.16 Summary of agreements relating to Cambridge Innovation Capital

15.16.1 Subscription Agreement and Shareholders' Agreement

Pursuant to a subscription agreement entered into on 9 October 2013 between (1) Cambridge Innovation Capital plc ("CIC") and (2) IP2IPO Limited and a shareholders' agreement entered into on 16 July 2013 between (1) The Chancellor, Masters, and Scholars of the University of Cambridge (the "University of Cambridge"), (2) RBC CEES Trustee Limited, (3) CIC and (4) Cambridge Innovation Capital (Jersey) Limited ("Subsidiary"), IP2IPO Limited agreed to subscribe for 4,000,000 B shares of £1 each in the capital of CIC at a subscription price of £1.25 per share (which gave IP2IPO Limited an 8 per cent. of the issued share capital of CIC).

15.16.2 Articles of association of CIC

The articles of association adopted by CIC provide that:

(a) The A shares, the B shares and the B1 shares are separate classes of shares but shall rank pari passu, except in respect of a return of assets prior to a listing of CIC, where the holders of B shares shall first be paid an amount equal to the aggregate subscription price paid for the B shares, secondly the holders of A shares and B1 shares shall be paid an amount equal to 25 per cent. of the amount paid to the holders of B shares and the balance shall be paid equally between the holders of shares of whatever class pro rata to the number of shares held by them.

(b) The Board shall refuse to register any transfer of any share unless such transfer is made in compliance with the pre-emption provisions of the articles of association.

15.17 Summary of the agreement relating to Columbia University

15.17.1 Collaboration Agreement relating to the IP Commercialisation Partnership

Pursuant to a collaboration agreement dated 24 October 2013 and made between (1) IP Group Inc., (2) IP2IPO Americas Limited (together "IPG") and (3) The Trustees of Columbia University in the City of New York, on behalf of Columbia Technology Ventures (the "University"), the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with the commercialisation of early-stage, proof of principle opportunities based on intellectual property developed at Columbia University and geared towards the formation of spin-out companies. Broadly summarised, these arrangements entitle IPG, at its sole discretion and determination, to fund proof of principle ("POP") opportunities up to an aggregate level of \$500,000 over a period of 18 months from the date of the agreement (the "Pilot Term").

During the Pilot Term, IPG shall support and work in co-operation with the University in its identification of potential commercialisation opportunities in or relating to technologies developed within the University.

15.18 Summary of the agreement relating to the University of Pennsylvania

15.18.1 Collaboration Agreement relating to the IP Commercialisation Partnership

Pursuant to a collaboration agreement dated 11 November 2013 and made between (1) IP Group Inc., (2) IP2IPO Americas Limited (together "IPG") and (3) The Trustees of the University of Pennsylvania ("Penn"), the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with early-stage, proof of principle opportunities for IPG to invest in technologies and companies based on Penn IP trough Upstart (the UPstart company formation program of Penn's Centre for Technology Transfer ("CTT")). Broadly summarised, these arrangements entitle IPG, at its sole discretion and determination, to fund proof of principle ("POP") opportunities up to an aggregate level of \$500,000 over a period of 18 months from the date of the agreement (the "Pilot Term").

During the Pilot Term, IPG shall support and work in co-operation with Penn in its identification of potential commercialisation opportunities in or relating to technologies designated by UPstart;

15.19 Other Material Contracts

(a) The Placing Agreement

Pursuant to the terms and conditions contained in the Placing Agreement, the Company has appointed Numis as (i) sponsor in connection with Admission; (ii) its agent for the purpose of publishing the Open Offer and the Offer for Subscription; (iii) its agent for implementing the Placing, in relation to which Numis has agreed to use its reasonable endeavours to procure Non-Firm Placees for the Placing Shares; and (iv) its agent for implementing the Firm Placing, in relation to which Numis has agreed to its reasonable endeavours to procure Firm Placees for all of the Firm Placed Shares at the Issue Price and, to the extent that Numis fails to procure such Firm Placees, Numis shall subscribe as principal for any Firm Placed Shares not taken up at the Issue Price as underwriter of the Firm Placing. Numis has not agreed to underwrite the Placing, the Open Offer or the Offer for Subscription.

In consideration of Numis' services under the Placing Agreement, the Company has agreed to pay to Numis (i) subject to and conditional upon the Acquisition Announcement being released through a Regulatory Information Service, a corporate finance fee of £200,000; (ii) a corporate finance fee of £435,000 on completion of the Acquisition and (iii) subject to and conditional upon Capital Raising Admission, a placing fee of 2 per cent. of the total aggregate gross proceeds of the Capital Raising; and all properly incurred costs or expenses of, or in connection with, the Placing, Open Offer, Capital Raising Admission and the Placing Agreement.

The obligations of Numis under the Placing Agreement are subject to certain conditions being satisfied including, amongst others: (i) the passing of the Resolutions (without material amendment) at the General Meeting; (ii) the Company having complied with all its obligations, in each case under the Placing Agreement or under the terms and conditions of the Placing and Open Offer, which fall to be performed or satisfied prior to Capital Raising Admission; (iii) Capital Raising Admission becoming effective by not later than 8.00 a.m. on 14 February 2014 (or such later time and date as Numis and the Company may agree); and (iv) there being no material breach of the warranties given in the Placing Agreement.

If any of the conditions is not satisfied (or waived by Numis) or becomes incapable of being satisfied by the required time and date being 8.00 a.m. on 14 February 2014 and/or such later time and date as Numis may agree, then Numis' obligations under the Placing Agreement shall cease and determine, without prejudice to any liability for any prior breach of the agreement and pursuant to certain surviving provisions. Additionally, Numis may, by notice, terminate the Placing Agreement in certain circumstances including, amongst others, where, there shall have been a material adverse change in the condition or the earnings, results of operations, management, business affairs or prospects of the Company and its subsidiaries and subsidiary undertakings from time to time, but only prior to Capital Raising Admission. Numis is not entitled to terminate the Placing Agreement after Capital Raising Admission.

The Company has given certain customary warranties and indemnities to Numis. The liabilities of the Company under those warranties and indemnities are unlimited as to time and amount.

In addition, the Company has further agreed that, subject to certain customary exceptions (including the issue of Shares under the Company's share option schemes) between the date hereof and the date falling 180 days after the date of the Placing Agreement, it will not, without the prior written consent of Numis, enter into any commitment or agreement, or put itself in a position where it is obliged to announce that any commitment or agreement may be entered into, which is or may be material in the context of the Capital Raising or any of the transactions contemplated under the Placing Agreement, or issue any shares or options over shares or securities convertible or exchangeable into shares or enter into any agreement or undertaking to do the same. Numis has agreed that neither it nor any person acting on its behalf will procure Placees for any of the Capital Raising Shares to be allotted and issued pursuant to the Capital Raising other than in accordance with certain selling restrictions.

(b) Agreements relating to Fusion IP

(i) Co-investment Agreement

Pursuant to a co-investment agreement dated 9 November 2009 between (1) Fusion IP and (2) IP2IPO Limited, the parties agreed for IP2IPO Limited to have the right, exercisable in each case at its discretion, to acquire 20 per cent. of Fusion IP's initial equity and/or debt holding in each new portfolio company formed by Fusion IP under Fusion IP's current agreements with Cardiff University and the University of Sheffield at a pre-determined valuation of each such company of £500,000. Following the allocation of founder equity in its new portfolio companies, Fusion IP typically holds 60 per cent. of the share capital of such companies. IP2IPO Limited will therefore ordinarily acquire from Fusion IP a shareholding of 12 per cent. of the issued share capital on the exercise of its co-investment rights. In the event that IP2IPO Limited has exercised its right to acquire this initial shareholding from Fusion IP in respect of any particular portfolio company, IP2IPO Limited will thereafter be legally bound to invest 20 per cent. of the first seed funding round in excess of £200,000 undertaken by Fusion IP in such company. Such investment will be made at the same price and on the same basis as that made by Fusion IP.

The co-investment agreement provides for a process and timeline in accordance with which the co-investment rights detailed above are to be exercised and further provides that, in the event IP2IPO Limited shall in any two year period have declined to exercise its co-investment rights in respect of 50 per cent. of the portfolio company opportunities with which it is presented and in respect of which Fusion IP has committed to invest at least £200,000 of seed funding, Fusion IP may terminate the coinvestment agreement.

Each party may terminate the agreement on notice in writing to the other upon the happening of any of the following:

• (1) application being made for an administrative order in relation to the other;
• (2) a petition being presented, a meeting being convened or an effective resolution being passed for the winding-up of the other; or
• (3) the appointment of a receiver or similar officer in respect of the whole or any part of the assets or undertaking of the other.

The co-investment rights detailed above shall, unless terminated earlier as provided above, subsist through the terms of the Cardiff Agreement (being to 9 January 2017) and the Sheffield Agreement (being to 16 February 2015 for medical IP and 1 August 2018 for all physical IP).

(ii) Subscription Agreement

Pursuant to a subscription agreement dated 9 November 2009 between (1) Fusion IP and (2) the Company, the parties agreed that the Company will subscribe for 10,740,741 of new ordinary shares to be issued by Fusion IP in consideration for the issue of 5,471,699 new ordinary shares of 2 pence each in the capital of the Company.

Under the agreement, the Company had the right, but no obligation, to elect to make a cash payment of £2,900,000 by way of consideration for the allotment and issue of the new Fusion IP shares.

16. FUSION IP MATERIAL CONTRACTS

16.1 Agreement with the University of Sheffield

Fusion IP entered into an agreement with the University of Sheffield for the commercialisation of its application of knowledge about chemistry, living organisms, and their components or molecules or techniques that affect their behaviour ("Medical Life Science IP") in January 2005 (the "Sheffield Agreement"). On 7 July 2008, Fusion IP, Fusion IP Trading Limited (now Fusion IP Sheffield Limited) ("Fusion IP Sheffield"), Sheffield University Enterprises Limited ("SUEL") and the University of Sheffield entered into an agreement relating to certain "life sciences" intellectual property developed by the University of Sheffield (the "Expanded Sheffield Agreement"), which amends and restates the Sheffield Agreement, pursuant to which the Fusion IP Group's (through its wholly owned subsidiary, Fusion IP Sheffield) entitlement under the Sheffield Agreement extends to all Intellectual Property generated through research undertaken by staff employed by the University of Sheffield, save for Intellectual Property arising or developed on behalf of or in association with the Advanced Manufacturing and Research Centre. Under the terms of the Expanded Sheffield Agreement, Fusion IP is entitled to direct that all such Intellectual Property be assigned (or, if it so chooses, licensed), at market value, to a then existing or newly incorporated in which the Fusion IP Group will acquire an equity investment pursuant to the Expanded Sheffield Agreement (a "Sheffield Portfolio Company") for the purposes of undertaking the commercialisation of such Intellectual Property. Fusion IP Sheffield is also entitled, subject to approval by the University of Sheffield, to licence such Intellectual Property to a third party on behalf of the University of Sheffield and, in return for the implementation, administration and management of such licences, Fusion IP Sheffield is entitled to 50 per cent. of the net income from such licences. Such entitlement is to last for ten years in relation to Intellectual Property other than Medical Life Science IP, and until February 2015 in relation to Medical Life Science IP (being the ten year period provided for in the Sheffield Agreement). The Expanded Sheffield Agreement is subject to earlier termination if Fusion IP Sheffield becomes insolvent or ceases to be wholly owned by the Fusion IP Group.

Fusion IP Sheffield's entitlement is subject to the terms of financing and third party collaborative research agreements into which the University of Sheffield enters into in the ordinary course. The University of Sheffield may also, from 19 months following the relevant Intellectual Property first being brought to the attention of Fusion IP Sheffield, exclude it from this entitlement if Fusion IP Sheffield has not then elected for it to be assigned or licensed to a Sheffield Portfolio Company and no written plan is prepared for the commercialisation in the following 12 months or Fusion IP Sheffield does not adhere to any plans prepared. Additionally, if Intellectual Property that has been assigned or licensed to a Sheffield Portfolio Company has not had third party funding of £50,000, or more or the consideration for which Intellectual Property has not been paid in full, and is not used by a Sheffield Portfolio Company for a continuous period of 18 months, the University of Sheffield is entitled to recover ownership of it or to terminate any licence granted to a Sheffield Portfolio Company where a written business plan for the commercialisation of the Intellectual Property is not adhered to by Fusion IP Sheffield. This 18 month period is shortened to 12 months if the University of Sheffield demonstrates to Fusion IP Sheffield that it can commercialise the Intellectual Property itself, if Fusion IP Sheffield elects not to do so on that proposed basis and if a member of the Group is already using Intellectual Property for the same purpose. If Fusion IP Sheffield's current account balance falls below £500,000 or it remains in unremedied breach of the Expanded Sheffield Agreement or the Sheffield Portfolio Sheffield Loan Notes (referred to below) for 30 days or more, the University of Sheffield can suspend this entitlement.

The consideration payable by Fusion IP Sheffield pursuant to the Expanded Sheffield Agreement comprised:

• 16.1.1 the allotment and issue to the University of Sheffield of up to 4,347,826 Fusion IP Shares. However, the Expanded Sheffield Agreement provided that such Fusion IP Shares was only issued to the University of Sheffield to the extent that following such issue the University of Sheffield does not hold more than 3.5 per cent of the issued share capital of Fusion IP than is held by Cardiff University. Therefore, the University of Sheffield was issued 3,140,000 Fusion IP Shares. The remaining 1,207,826 Fusion IP Shares will be issued to the University of Sheffield if and when and to the extent that by reason of a dilution of the Fusion IP Share holdings of the University of Sheffield and Cardiff University, such Fusion IP Shares can be issued to the University of Sheffield without giving rise to the University of Sheffield's current Fusion IP Share holding representing more than 3.5 per cent. of the issued share capital more than Cardiff University's current Fusion IP Share holding; and
• 16.1.2 any reasonable transaction costs incurred by the University of Sheffield up to a maximum of £40,000.

In addition, Fusion IP Sheffield will also pay to the University of Sheffield an amount equal to 2.5 per cent. of any future funds raised by Fusion IP which are to be used in investing in Non-Life Science IP generated at the University of Sheffield subject to a maximum payment of £100,000. Fusion IP Sheffield will also pay to the University of Sheffield £8,750 per month for the provision of services by the University of Sheffield to enable Fusion IP Sheffield to identify and patent the University of Sheffield's Intellectual Property.

The Expanded Sheffield Agreement also provided for an option exercisable by either Fusion IP Sheffield or by the University of Sheffield, on or prior to the third anniversary of completion of the Expanded Sheffield Agreement, to call for the transfer by the University of Sheffield to Fusion IP Sheffield of shares in certain existing spin-out companies that have already been established to commercialise the University of Sheffield-generated Intellectual Property, being Blastech Limited, Conteque Limited, Limited State Limited, Material State Limited, Vulcan Solutions Limited and Webelements Limited. On the exercise of such option, the shares have been paid for by loan notes issued by Fusion IP Sheffield to the University of Sheffield (the "Sheffield Loan Notes") secured against the shares in question by a fixed charge over those shares. The Sheffield Loan Notes carry a floating rate of interest being 1.5 per cent. above LIBOR for six months deposits, calculated every six months, and will be repayable on the tenth anniversary of the issue of the loan note, but only to the extent that Fusion IP Sheffield realises value from the relevant shares by way of receiving a dividend or sale or listing of the shares.

16.2 Agreement with Cardiff University

On 29 November 2006, Fusion IP entered into an agreement with Fusion IP Cardiff Limited ("Fusion IP Cardiff"), Cardiff University, University College Cardiff Consultants Limited and Cardiff Partnership Fund (the "Cardiff Agreement").

The Cardiff Agreement governs Fusion IP Cardiff's entitlement with respect to Intellectual Property generated through research undertaken by staff employed by Cardiff University. Fusion IP Cardiff is entitled to direct that all such Intellectual Property be licenced to a then existing or newly incorporated company in which the Fusion IP Group will acquire an equity investment pursuant to the Cardiff Agreement (a "Cardiff Portfolio Company") for the purposes of undertaking the commercialisation of such Intellectual Property. The terms of such licence are that it would be for a fixed term of 24 months, exclusive, worldwide, royalty free, non-assignable and for all uses, and, subject to £200,000 (or such lesser amount that Fusion IP can demonstrate is required to commercialise such Intellectual Property) having been raised in respect of that Intellectual Property, Fusion IP Cardiff can require that such Intellectual Property be assigned to a Cardiff Portfolio Company. This entitlement is to last for 10 years. The Cardiff Agreement is subject to earlier termination in the event of Fusion IP Cardiff becoming insolvent, ceasing to be wholly owned by the Group or being in material, unremedied breach of the Cardiff Agreement.

Fusion IP Cardiff's entitlement is subject to the terms of financing and third party collaborative research agreements into which Cardiff University enters into in the ordinary course. If Cardiff University is not able to procure the assignment or licence of all such Intellectual Property because of the terms of third party collaborative research agreements, it will instead grant a licence to the fullest extent possible to the relevant Cardiff Portfolio Company for the use of the Intellectual Property. Cardiff University may also, from nineteen months following the relevant Intellectual Property first being brought to the attention of Fusion IP Cardiff, exclude it from this entitlement if Fusion IP Cardiff has not then elected for it to be assigned or licensed to a Portfolio Company and no written plan is prepared for the commercialisation in the following twelve months or Fusion IP Cardiff does not adhere to any plan so prepared. Additionally if Intellectual Property that has been assigned or licensed to a Cardiff Portfolio Company has not had third party funding of £50,000 or more and is not used by a Cardiff Portfolio Company for a continuous period of eighteen months, Cardiff University is entitled to recover ownership of it or to terminate any licence granted to a Cardiff Portfolio Company where a written business plan for commercialisation of the Intellectual Property is not adhered to by Fusion IP Cardiff. This eighteen month period is shortened to twelve months if Cardiff University demonstrates to Fusion IP Cardiff that it can commercialise the Intellectual Property itself, if Fusion IP Cardiff elects not to do so on that proposed basis and if a member of the Group is already using Intellectual Property for the same purpose. If Fusion IP Cardiff's current account balance falls below £500,000, or it remains in unremedied breach of the Cardiff Agreement or the Portfolio Company Loan Notes (referred to below) for 30 days or more, Cardiff University can suspend this entitlement.

The consideration payable by Fusion IP pursuant to the Cardiff Agreement comprised the allotment and issue to Cardiff University of 10,997,541 Fusion IP Shares, a cash payment of approximately £180,000 (being 2.5 per cent. of those funds raised pursuant to a placing of up to 5,349,997 Fusion IP Shares on or around 9 January 2007 (the "Cardiff Placing") which are to be used in investing in Cardiff Portfolio Companies), together with any reasonable transaction costs incurred by Cardiff University up to a maximum of £80,000 (plus VAT). Pursuant to the Cardiff Agreement, Fusion IP Cardiff will also pay to Cardiff University £17,500 per month for the provision of services by Cardiff University to enable Fusion IP Cardiff to identify and patent Cardiff University's Intellectual Property. Pursuant to the Cardiff Agreement, Fusion IP Cardiff agrees to use all of the funds raised pursuant to the Cardiff Placing (net of agreed costs) plus £1,000,000 of its own resources exclusively in the operation of the business governed by the Cardiff Agreement.

The Cardiff Agreement also provided for the transfer to Fusion IP Cardiff by University College Cardiff Consultants Limited and Cardiff Partnership Fund of shares in the each of Abcellute Limited, Art of Xen Limited, Cardiff Protides Limited, Insect Investigations Limited, Medaphor Limited, Muscagen Limited and Q Chip Limited that have already been established to commercialise Cardiff University-generated Intellectual Property. These shares have been paid for by loan notes issued by Fusion IP Cardiff to Cardiff University (the "Cardiff Loan Notes") secured against the shares in question by a fixed charge over those shares.

The Cardiff Loan Notes each carry a floating rate of interest being 1.5 per cent. above LIBOR for 6 month deposits, calculated every six months, and will be repayable in full on the tenth anniversary of the issue of the loan note, but only to the extent that Fusion IP Cardiff realises value from the relevant shares by way of receiving a dividend or selling or listing the shares. Fusion IP will guarantee the obligations of Fusion IP Cardiff to Cardiff University under the Cardiff Agreement and the Cardiff Loan Notes.

16.3 Memorandum of understanding with the University of Nottingham

• 16.3.1 On 28 February 2013, Fusion IP entered into a memorandum of understanding with the University of Nottingham in connection with identifying and creating new spin-out companies to hold intellectual property created by research conducted at the University of Nottingham (the "Nottingham MOU").
• 16.3.2 Pursuant to the terms of the Nottingham MOU, Fusion IP will, among other things, provide the services of the equivalent of one full time employee to work at the University of Nottingham, which may be fulfilled by one or more person. The role of the employee(s) will be to assist the University of Nottingham to identify and develop its business opportunities in connection with the creation of new spin-out companies to hold intellectual property created by research conducted at the University of Nottingham. If such opportunities are identified, Fusion IP may elect to assist the University of Nottingham develop such opportunity (a "Project") by the creation of a new company (a "Newco") to hold the intellectual property rights relating to the Project or the licencing of the Project.
• 16.3.3 On incorporation of a Newco, Fusion IP shall be issued with up to 10 per cent. of the share capital of Newco, whilst the remaining share capital of Newco shall be issued to the University of Nottingham and those persons who created the intellectual property relating to the Project and held by Newco (in accordance with the university's internal policies). Thereafter, Fusion IP and the University of Nottingham may invest, in aggregate, up to £750,000 (or such other amount as the parties agree) in Newco (in equal proportions). Prior to such new investment, Newco's deemed value shall be £500,000. Each party may arrange for their proportion to be funded by their associate or a co-investor. To the extent Fusion IP

or the University of Nottingham do not take up their right to make such investment in Newco (in whole or in part) after the date which is six months from the date of incorporation of Newco, the other party may make an additional investment in Newco in respect of the investment opportunity not so taken up.

• 16.3.4 Fusion IP shall assist Newco to identify potential third party funders, including the Company.
• 16.3.5 If a Newco is not established in connection with a Project, Fusion IP and the University of Nottingham agree that any net revenue received by the University of Nottingham in connection with licencing the Project will be shared equally between Fusion IP and the University of Nottingham until such time as Fusion IP has received its cash investment in the Project and, thereafter, Fusion IP shall receive 10 per cent of any such net revenue.
• 16.3.6 It is intended that the Nottingham MOU shall be in place for an initial period of five year, to be reviewed annually, and may be terminated by either party at any time.

16.4 Memorandum of understanding with Swansea University

• 16.4.1 On 17 March 2013, Fusion IP entered into a memorandum of understanding with Swansea University in connection with identifying and creating new companies to hold intellectual property created by research conducted at Swansea University (the "Swansea MOU"). The initial term of the Swansea MOU is five years, and thereafter may be renewed by the parties. The MOU may be terminated by either party at any time.
• 16.4.2 Pursuant to the terms of the Swansea MOU, Fusion IP will provide the services of its employees to Swansea University to assist in identifying and developing its business opportunities in connection with the creation of new spin-out companies to hold intellectual property created by research conducted at Swansea University. If such opportunities are identified, Fusion IP may elect to assist Swansea University to develop such opportunity (a "Project") by the creation of a new company (a "Newco") to hold the intellectual property rights relating to the Project or the licencing of the Project.
• 16.4.3 On incorporation of a Newco, Fusion IP shall be issued with up to 10 per cent. of the share capital of Newco, whilst the remaining share capital of Newco shall be issued to Swansea University and those persons who created the intellectual property relating to the Project and held by Newco (in accordance with the university's internal policies). Thereafter, Fusion IP and Swansea University may invest, in aggregate, up to £750,000 (or such other amount as the parties agree) in Newco (in equal proportions). Prior to such new investment, Newco's deemed value shall be £500,000. Each party may arrange for their proportion to be funded by their associate or a co-investor. To the extent Fusion IP or Swansea University do not take up their right to make such investment in Newco (in whole or in part) after the date which is six months from the date of incorporation of Newco, the other party may make an additional investment in Newco in respect of the investment opportunity not so taken up.
• 16.4.4 Fusion IP shall assist Newco to identify potential third party funders, including the Company.
• 16.4.5 If a Newco is not established in connection with a Project, Fusion IP and Swansea University agree that any net revenue received by Swansea University in connection with licencing the Project will be shared equally between Fusion IP and Swansea University until such time as Fusion IP has received its cash investment in the Project and, thereafter, Fusion IP shall receive 10 per cent of any such net revenue.

17. LITIGATION

17.1 IP Group

There are no, and have been no, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the period of twelve months immediately preceding the date of this document which may have, or have had in the recent past, significant effects on the Company's financial position or profitability.

17.2 Fusion IP

There are no, and have been no, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the period of twelve months immediately preceding the date of this document which may have, or have had in the recent past, significant effects on Fusion IP's financial position or profitability.

18. PENSIONS

18.1 IP Group

IP Group operates a group pension scheme for which all employees are eligible. The assets of the scheme are held separately from those of IP Group in an independently administered fund. IP Group makes contributions at an agreed level on behalf of each of its employees (including the Executive Directors) to either this scheme or to a personal pension scheme which has been nominated by the relevant employee for such purpose. IP Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due.

18.2 Fusion IP

Fusion IP contributes to a pension scheme nominated by its employees. At present, such contributions are made only to private pension schemes of relevant employees. Fusion IP has no further payment obligations once such contributions have been paid.

19. SIGNIFICANT SUBSIDIARIES

19.1 IP Group

The following table contains a list of the principal subsidiaries of the Company as at 24 January 2014 (being the latest practicable date prior to the publication of this document), each of which is considered by the Company to be likely to have a significant effect on the assessment of the assets and liabilities, the principal position and/or the profits and losses of IP Group:

		Proportion of	Proportion of
	Country of	ownership	voting power
Name of subsidiary	incorporation	interest (%)	held (%)
IP2IPO Limited	England and Wales	100	100
IP2IPO Management Limited	England and Wales	100	100
IP2IPO Management II Limited	England and Wales	100	100
IP2IPO Management V Limited	England and Wales	100	100
IP2IPO Management VI Limited	England and Wales	100	100
IP2IPO Management VII Limited	England and Wales	100	100
IP2IPO Management VIII Limited	England and Wales	100	100
Top Technology Ventures Limited	England and Wales	100	100
IP Venture Fund (GP) Limited	England and Wales	100	100
Techtran Group Limited	England and Wales	100	100
North East Technology (GP) Limited	England and Wales	100	100
IP Venture Fund II (GP) LLP	England and Wales	100	100
IP2IPO Americas Limited	England and Wales	100	100
IP Group Inc.	United States of America	100	100
Modern Biosciences plc	England and Wales	54.3	69
PIMCO 2664 Limited	England and Wales	54.3	69

19.2 Fusion IP

		Proportion of	Proportion of
	Country of	ownership	voting power
Name of subsidiary	incorporation	interest (%)	held (%)
Fusion IP Sheffield Limited	England and Wales	100	100
Fusion IP Cardiff Limited	England and Wales	100	100
Biofusion Licensing (Sheffield) Limited	England and Wales	100	100
Resagen Limited	England and Wales	100	100
Rhedyn Limited	England and Wales	100	100
Wound Genetics Limited	England and Wales	100	100
Extraject Technologies Limited	England and Wales	60	60
Medella Therapeutics Limited	England and Wales	60	60
PH Therapeutics Limited	England and Wales	60	60
Proflu Limited	England and Wales	60	60

20. PROPERTY, PLANT AND EQUIPMENT

20.1 IP Group

As at 30 June 2013, the net book value of property, plant and equipment held by IP Group was £0.2 million. There have been no material changes in the net book value of the property, plant and equipment held by IP Group since that date.

20.2 Fusion IP

As at 31 July 2013, the net book value of property, plant and equipment held by Fusion IP was £17,000. There have been no material changes in the net book value of the property, plant and equipment held by Fusion IP since that date.

21. SIGNIFICANT CHANGE

• 21.1 As set out in paragraph 5.3 of Part I of this document (on page 43), the fair value of the Group's portfolio at 31 December 2013 (being the latest unaudited figures available prior to the publication of this document) was approximately £286 million, compared to approximately £192 million as at 30 June 2013, a net fair value increase for the six month period of approximately £82 million excluding net investments and realisations. Cash, cash equivalents and deposits at 31 December 2013 totalled approximately £24 million, compared to £38 million as at 30 June 2013. Other than this increase in fair value of the Group's portfolio and decrease in its cash, cash equivalents and deposits, there has been no significant change in the financial or trading position of the Group since 30 June 2013, being the date to which the latest published interim financial statements of IP Group were prepared.
• 21.2 In the period between 1 August 2013 and 31 December 2013, there was a reduction of more than £1.5 million in the net assets of Fusion IP due to the use of cash and the amortisation of intangible assets. Save as disclosed in this document, there has been no significant change in the financial or trading position of Fusion IP Group which has occurred since 31 July 2013, being the date to which the latest published audited financial statements of Fusion IP were prepared.

22. RELATED PARTY TRANSACTIONS

22.1 Save as disclosed in note 6 to the Company's interim results for the six months ended 30 June 2013, in note 24 to the Company's annual report and accounts for the financial year ended 31 December 2012, in note 23 to the Company's annual report and accounts for the financial year ended 31 December 2011 and in note 24 to the Company's annual report and accounts for the financial year ended 31 December 2010 (which financial information is incorporated by reference into this document), no member of IP Group has entered into a related party transaction during the period commencing on 1 January 2010 and ending on 24 January 2014 (being the latest practicable date prior to the publication of this document).

22.2 Details of all related party transactions that have been entered into by a member of IP Group during the period commencing on 1 January 2011 and ending on 24 January 2014 (being the latest practicable date prior to the publication of this document) are set out below:

IP Group has various related parties arising from its Directors' transactions, subsidiaries, equity stakes in portfolio companies and management of certain limited partnership funds.

(a) Limited partnerships

IP Group manages a number of investment funds structured as limited partnerships. IP Group entities have a limited partnership interest and act as the general partners of these limited partnerships. IP Group therefore has power to exert significant influence over these limited partnerships. The following amounts in respect of these limited partnerships are included within the IP Group's accounting records as at 31 December 2013:

Statement of comprehensive income	Period to
	31 December 2013
	£'m
Revenue from services	1.3
Statement of financial position	————— As at
	31 December 2013
	£'m
Investment in limited partnerships	3.9
	—————

(b) Director transactions

The Directors and Proposed Directors had beneficial interests in shares in the following spinout companies as at 24 January 2014 (the latest practicable date prior to publication of this document):

		Number of
		shares held at
Director	Company name	24 January 2014	%
Bruce Smith	Capsant Neurotechnologies Limited	20,724	1.4%
	Evocutis plc	15,241	<0.1%
	Getech Group plc	15,000	0.1%
	iQur Limited	2,000	0.8%
	Nanotecture Group plc	50,000	0.5%
	Velocys plc	10,000	<0.1%
	Synairgen plc	200,000	0.3%
Alan Aubrey	Amaethon Limited – A Shares	104	3.1%
	Amaethon Limited – B Shares	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	0.3%
	Avacta Group plc	20,276,113	0.6%
	Capsant Neurotechnologies Limited	11,631	0.8%
	Chamelic Limited	26	0.4%
	Crysalin Limited	1,447	0.1%
	EmDot Limited	15	0.9%
	Evocutis plc	767,310	0.4%
	Getech Group plc	15,000	0.1%
	Green Chemicals plc	108,350	0.8%
	Ilika plc	117,500	0.2%

		Number of
		shares held at
Director	Company name	24 January 2014	%
Alan Aubrey	Karus Therapeutics Limited	223	0.1%
	Mode Diagnostics Limited	3,226	0.4%
	Modern Biosciences plc	1,185,150	2.1%
	Modern Water plc	519,269	0.7%
	Oxford Advanced Surfaces Group plc	2,172,809	1.1%
	Velocys plc	21,518	<0.1%
	Oxford Nanopore Technologies Limited	11,442	0.6%
	Oxtox Limited	25,363	0.3%
	Pharminox Limited	685	0.3%
	Photopharmica (Holdings) Limited	37,020	1.0%
	Plexus Planning Limited	1,732	0.8%
	Retroscreen Virology Group plc	37,160	0.1%
	Revise Limited	19	0.5%
	Revolymer plc	88,890	0.2%
	Salunda Limited
	(formerly Oxford RF Sensors Limited)	53,639	0.8%
	Structure Vision Limited	212	1.0%
	Surrey Nanosystems Limited	393	0.3%
	Sustainable Resource Solutions Limited1	30	1.2%
	Evocutis plc	76,731	0.7%
	Tissue Regenix Group plc	2,389,259	0.4%
	Tracsis plc	121,189	20.5%
	Xeros Limited	241	0.1%
Mike Townend	Amaethon Limited – A Shares	104	3.1%
	Amaethon Limited – B Shares	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	0.3%
	Capsant Neurotechnologies Limited	11,282	0.8%
	Chamelic Limited	23	0.3%
	Crysalin Limited	1,286	0.1%
	EmDot Limited	14	0.8%
	Green Chemicals plc	113,222	0.8%
	Mode Diagnostics Limited	1,756	0.2%
	Modern Biosciences plc	1,185,150	2.1%
	Modern Water plc	575,000	0.7%
	Oxford Advanced Surfaces Group plc	932,994	0.5%
	Oxford Nanopore Technologies Limited	3,490	0.2%
	Oxtox Limited	25,363	0.3%
	Photopharmica (Holdings) Limited	37,020	1.0%
	Retroscreen Virology Group plc	37,160	0.1%
	Revise Limited	18	0.5%
	Revolymer plc	35,940	0.1%
	Structure Vision Limited	212	1.0%
	Surrey Nanosystems Limited	350	0.2%
	Sustainable Resource Solutions Limited1	28	1.1%
	Tissue Regenix Group plc	1,950,862	0.3%
	Tracsis plc	25,430	0.1%
	Xeros Limited	213	0.1%

¹ Reflects holdings in B ordinary shares.

		Number of
		shares held at
Director	Company name	24 January 2014	%
Greg Smith	Avacta Group plc	390,407	<0.1%
	Capsant Neurotechnologies Limited	895	<0.1%
	Chamelic Limited	3	<0.1%
	Crysalin Limited	149	<0.1%
	EmDot Limited	4	0.2%
	Encos Limited	5,671	0.3%
	Getech Group plc	8,000	<0.1%
	Green Chemicals plc	4,830	<0.1%
	Mode Diagnostics Limited	361	<0.1%
	Modern Biosciences plc	313,425	0.6%
	Modern Water plc	7,250	<0.1%
	Velocys plc	2,559	<0.1%
	Oxford Nanopore Technologies Limited	150	<0.1%
	Retroscreen Virology Group plc	61,340	0.1%
	Revise Limited	6	0.2%
	Revolymer plc	4,500	<0.1%
	Summit Corporation plc	15,972	<0.1%
	Surrey Nanosystems Limited	76	0.1%
	Sustainable Resource Solutions Limited1	9	0.4%
	Tissue Regenix Group plc	175,358	<0.1%
	Xeros Limited	33	<0.1%
Charles Winward	Amaethon Limited – A Shares	15	0.5%
	Amaethon Limited – B Shares	1,766	0.2%
	Amaethon Limited – Ordinary shares	3	<0.1%
	Capsant Neurotechnologies Limited	2,264	0.2%
	Chamelic Limited	3	<0.1%
	Crysalin Limited	189	<0.1%
	EmDot Limited	5	0.3%
	Encos Limited	6,530	0.3%
	Mode Diagnostics Limited	421	0.1%
	Modern Biosciences plc	360,914	0.7%
	Modern Water plc	12,400	<0.1%
	Oxford Advanced Surfaces Group plc	156,213	0.1%
	Oxford Nanopore Technologies Limited	150	<0.1%
	Oxtox Limited	3,742	<0.1%
	Photopharmica (Holdings) Limited	3,590	0.1%
	Retroscreen Virology Group plc	66,080	0.2%
	Revise Limited	6	0.2%
	Revolymer plc	4,500	<0.1%
	Structure Vision Limited	26	0.1%
	Surrey Nanosystems Limited	87	0.1%
	Sustainable Resource Solutions Limited1	10	0.4%
	Tissue Regenix Group plc	482,236	0.1%
	Tracsis plc2	56,500	0.2%
	Xeros Limited	39	<0.1%
David Baynes	None
Francis Carpenter	None

1 Reflects holdings in B ordinary shares.

2 In addition, Charles Winward holds options over 137,517 ordinary shares in Tracsis plc.

		Number of
		shares held at
Director	Company name	24 January 2014	%
Jonathan Brooks	None
Mike Humphrey	None
Douglas Liversidge	None

(c) Portfolio companies

IP Group earns fees from the provision of business support services and corporate finance advisory to portfolio companies in which IP Group has an equity stake. The following amounts in respect of these fees are included within IP Group's accounting records as at 31 December 2013:

Statement of comprehensive income	Period to
	31 December 2013
	£'m
Revenue from services	0.7
Statement of financial position	————— As at
	31 December 2013
	£'m
Trade receivables	0.3
	—————

(d) Subsidiary companies

Subsidiary companies which are not 100% owned either directly or indirectly by the parent company have intercompany balances with other Group companies totalling as follows:

	As at
	31 December 2013
	£'m
Intercompany balances with other Group companies	7.8
	—————

These intercompany balances represent funding loans provided by Group companies that are interest free, repayable on demand and unsecured.

23. MISCELLANEOUS

• 23.1 The total cost and expenses of, and incidental to, the Capital Raising payable by the Company are estimated to amount to approximately £2.1 million (excluding VAT). If the Directors exercise their discretion to increase the size of the Capital Raising to £100.0 million, the total costs and expenses of, and incidental to, the Capital Raising payable by the Company are estimated to be approximately £2.6 million (excluding VAT).
• 23.2 The auditors of the Group are BDO LLP, whose address is 55 Baker Street, London W1U 7EU. The auditors are a member firm of the Institute of Chartered Accountants in England and Wales.
• 23.3 The Company's Registrar is Capita Asset Services, whose address is at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

• 23.4 Numis has given, and has not withdrawn, its written consent to the issue of this document with the inclusion herein of its name and references to it in the form and context in which they appear.

• 23.5 BDO LLP has given and has not withdrawn its written consent to the inclusion in this document of its accountant's report in Part VI of this document in the form and context in which it appears, and has authorised the contents of that report for the purposes of paragraph 5.5.3R(2)(f) of the Prospectus Rules.

• 23.6 The financial information contained in this document does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act. Statutory accounts of the Company for each of the financial years ended 31 December 2012, 31 December 2011 and 31 December 2010 have been delivered to the Registrar of Companies and the Company's auditors have made a report under section 495 of the Companies Act in respect of each of those statutory accounts and each such report was an unqualified report and did not contain a statement under section 498(2) or (3) of the Companies Act.
• 23.7 The Existing Shares are in registered form, are capable of being held in uncertificated form and are admitted to the Official List and are traded only on the main market for listed securities of the London Stock Exchange. Application for trading of the New Shares is not being, and will not be, sought on any other stock exchange other than the main market for listed securities of the London Stock Exchange. The New Shares will be admitted with the ISIN GB00B128J450.
• 23.8 The New Shares will be in registered form and, subject to the provisions of the Regulations, the Directors may permit the holding of shares of any class in uncertificated form and title to such shares may be transferred by means of a relevant system (as defined in the Regulations). Where shares are held in certificated form, share certificates will be sent to the registered members by first class post. Where shares are held in CREST, the relevant CREST stock account of the registered members will be credited.
• 23.9 The Capital Raising Shares will be issued at 165 pence per share. The Issue Price represents a 8.3 per cent. discount to the closing middle market price of 179.9 pence per IP Group Share on 22 January 2014 (being the latest practicable date before the announcement of the terms of the Capital Raising).
• 23.10 Save in respect of the Open Offer and the Offer for Subscription, none of the Capital Raising Shares have been marketed or are available to the public in conjunction with the application for the Capital Raising Shares to be admitted to the Official List.
• 23.11 The Company will make an appropriate announcement to a Regulatory Information Service giving details of the results of the Capital Raising and Acquisition in accordance with the Listing Rules.
• 23.12 The Company confirms that where information in this document has been sourced from a third party, the source of this information has been provided, the information has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

24. DOCUMENTS AVAILABLE FOR INSPECTION

• 24.1 Copies of the following documents will be available for inspection at the offices of Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES and at the registered office of the Company during usual business hours on any day (except Saturdays, Sundays and public holidays) from and including the date of this document until Capital Raising Admission and will also be available at the General Meeting for at least 15 minutes prior to, and during, the meeting:
• 24.1.1 the Articles;
• 24.1.2 the interim results for the six months ended 30 June 2013 and the annual report and accounts of the Company for the three financial years ended 31 December 2012, 2011 and 2010;
• 24.1.3 the written consents referred to in paragraphs 23.4 and 23.5 of Part VII of this document;

• 24.1.4 the Directors' and Proposed Directors' service contracts and letters of appointment referred to in paragraph 10.3 of Part VII of this document;

• 24.1.5 the Placing Agreement; and

• 24.1.6 this document.
• 24.2 In addition, copies of this document are available on the Company's website, www.ipgroupplc.com, or via the National Storage Mechanism (NSM) website located at www.morningstar.co.uk/uk/nsm.
• 27 January 2014

PART VIII

DOCUMENTS INCORPORATED BY REFERENCE

The interim results for the six months ended 30 June 2013 together with the annual report and accounts of IP Group for the financial years ended 31 December 2012, 31 December 2011 and 31 December 2010 are available for inspection in accordance with paragraph 25 of Part VII of this document and contain information which is relevant to the Acquisition and the Capital Raising. These documents are also available on IP Group's website at www.ipgroupplc.com.

The table below sets out the various sections of such documents which are incorporated by reference into this document, so as to provide the information required under the Prospectus Rules and to ensure that Shareholders and others are aware of all information which, according to the particular nature of IP Group and of the New Shares, is necessary to enable Shareholders and others to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of IP Group. It should be noted that other sections of such documents that are not incorporated by reference are either not relevant to Shareholders and others or are covered elsewhere in this Document.

		Page numbers in
Document Half-yearly report for the six months ended 30 June 2013	Section Highlights	such document 1
Half-yearly report for the six months ended 30 June 2013	Interim management report	2 to 10 inclusive
Half-yearly report for the six months ended 30 June 2013	Condensed consolidated statement of comprehensive income	11 to 14 inclusive
Half-yearly report for the six months ended 30 June 2013	Note to the half-yearly condensed set of financial statements	15 to 22
Half-yearly report for the six months ended 30 June 2013	Statement of directors' responsibilities	23
Half-yearly report for the six months ended 30 June 2013	Independent review report	24
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Chairman's statement	8 to 9 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Chief Executive's statement	10 to 11 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Directors' report	50 to 51 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Independent auditor's report	54
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of comprehensive income	55
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of financial position	56

		Page numbers in
Document	Section	such document
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of cash flows	57
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of changes in equity	58
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Notes to the consolidated financial statements	59 to 80 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Company balance sheet	81
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Notes to the Company's financial statements	82 to 84 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Chairman's statement	6 to 7 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Chief Executive's statement	8 to 9 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Portfolio review	10 to 19 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Financial review	20 to 23 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Directors' report	32 to 34 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Independent auditor's report	49
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of comprehensive income	50
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of financial position	51
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of cash flows	52
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of changes in equity	53

Document	Section	Page numbers in such document
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Notes to the consolidated financial statements	54 to 76 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Company balance sheet	77
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Notes to the Company's financial statements	78 to 80 inclusive
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Chairman's statement	4 to 5 inclusive
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Chief Executive Officer's statement	6 to 21 inclusive
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Directors' report	25 to 27 inclusive
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Independent auditor's report	41
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Consolidated statement of comprehensive income	42
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Consolidated statement of financial position	43
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Consolidated statement of cash flows	44
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Consolidated statement of changes in equity	45
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Notes to the consolidated financial statements	46 to 68 inclusive
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Company balance sheet	69
Annual report and accounts for the financial year ended 31 December 2010, together with the audit report thereon	Notes to the Company's financial statements	70 to 72 inclusive

PART IX

DEFINITIONS AND GLOSSARY

The following definitions apply throughout this document, unless the context otherwise requires:

"£5m QMUL Fund"	the fund of up to £5 million which the Group has committed towards making seed capital investments in QMUL spin-out companies pursuant to the terms of the Queen Mary Partnership
"£5m Bath Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Bath spin-out companies pursuant to the terms of the University of Bath Partnership
"£5m Bristol Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Bristol spin out companies pursuant to the terms of the University of Bristol Partnership
"£5m Glasgow Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Glasgow spin out companies pursuant to the terms of the University of Glasgow Partnership
"£5m King's Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in King's College London spin-out companies pursuant to the terms of the King's College London Partnership
"£5m Leeds Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Leeds spin-out companies pursuant to the terms of the University of Leeds Partnership
"£5m Southampton Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Southampton spin-out companies pursuant to the terms of the University of Southampton Partnership
"£5m Surrey Fund"	the fund of up to £5 million which the Group has committed towards making seed capital investments in the University of Surrey spin-out companies pursuant to the terms of the University of Surrey Partnership
"£5m York Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of York spin-out companies pursuant to the terms of the University of York Partnership
"Acquisition"	the proposed acquisition of the entire issued and to be issued share capital of Fusion IP (other than the Excluded Shares) by IP Group to be implemented by way of (i) the Scheme; or (ii) the Acquisition Offer (as the case may be)
"Acquisition Announcement"	the announcement made by IP Group, dated 23 January 2014, of the terms of the proposed acquisition of Fusion IP by IP Group pursuant to Rule 2.7 of the City Code

"Acquisition Offer"	should the Acquisition be implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act, the recommended offer to be made by or on behalf of IP Group to acquire the entire issued and to be issued share capital of Fusion IP and, where the context admits, any subsequent revision, variation, extension or renewal of such offer
"Admission"	in relation to the Capital Raising Shares, the Capital Raising Admission and in relation to the Consideration Shares, Scheme Admission
"Admission and Disclosure Standards"	the requirements contained in the publication "Admission and Disclosure Standards" containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's main market for listed securities
"AIM"	the market of that name operated by the London Stock Exchange
"Application Form"	the personalised application form on which Qualifying Non CREST Shareholders who are registered on the register of members of the Company at the Record Date may apply for Open Offer Shares under the Open Offer
"Articles"	the articles of association of the Company, summary details of which are set out in paragraph 4 of Part VII of this document
"Audit Committee"	the audit committee established by the Board
"Board" or "Directors"	the board of directors of the Company including from the Effective Date, the Proposed Directors
"Business Day"	any day (excluding Saturdays, Sundays and public holidays) on which banks are open in London for the transaction of normal banking business
"Cambridge Innovation Capital Agreements"	the arrangements entered into on 9 October 2013 between (1) Cambridge Innovation Capital plc and (2) IP2IPO Limited and (1) the University of Cambridge (2) RBC CEES Trustee Limited (3) Cambridge Innovation Capital plc and (4) Cambridge Innovation Capital (Jersey) Limited, further details of which are set out in paragraph 15.16 of Part VII
"Capital Raising"	the Firm Placing and the Placing, Open Offer and Offer for Subscription
"Capital Raising Admission"	the admission of the Capital Raising Shares (i) to the premium segment of the Official List and (ii) to trading on the London Stock Exchange's main market for listed securities, becoming effective in accordance, respectively, with LR 3.2.7G of the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards
"Capital Raising Shares"	the Firm Placed Shares, the Open Offer Shares, the Placing Shares and the Offer for Subscription Shares to be allotted and issued by IP Group pursuant to the Capital Raising
"Capital Reduction"	the proposed reduction of share capital of Fusion IP pursuant to the Scheme

"CCSS" or "CREST Courier and Sorting Service"	the CREST Courier and Sorting Service established by Euroclear to facilitate, among other things, the deposit and withdrawal of securities
"certificated" or "in certificated form"	a share or security which is not in uncertificated form
"City Code"	the City Code on Takeovers and Mergers issued by the Panel
"Closing Price"	the closing middle market price of a Share or a Fusion IP Share as derived from the Daily Official List in respect of IP Group and the AIM Appendix of the Daily Official List in respect of Fusion IP
"CNAP Partnership"	the arrangements entered into on 19 September 2003 between (1) the University of York, (2) IP2IPO Limited and (3) Amaethon Limited (as subsequently amended on 16 March 2005), further details of which are set out in paragraph 15.4 of Part VII of this document
"Companies Act"	the Companies Act 2006, as amended
"Company" or "IP Group"	IP Group plc, a company incorporated in England and Wales with registered number 04204490
"Conditions"	the conditions to the Acquisition referred to in paragraph 8.4 of Part I of this document and "Condition" means any one of them
"Consideration Shares"	the 38,998,844 new Shares to be issued to Scheme Shareholders credited as fully paid in accordance with the Scheme
"Court"	the High Court of Justice in England and Wales
"Court Meeting"	the meeting of Fusion IP Shareholders, as convened by order of the Court under section 896 of the Companies Act, to consider and, if thought fit, approve the Scheme
"Court Orders"	the orders of the court sanctioning the Scheme and confirming the Capital Reduction involved therein
"Corporate Governance Code"	the UK Corporate Governance Code published by the Financial Reporting Council in September 2012
"CREST"	the relevant system, as defined in the CREST Regulations, and the holding of shares in uncertificated form in respect of which Euroclear is the operator (as defined in the CREST Regulations)
"CREST Manual"	the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedures and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996 and as amended since)
"CREST member"	a person who has been admitted to Euroclear as a system member (as defined in the CREST Regulations)
"CREST participant"	a person who is, in relation to CREST, a system-participant (as defined in the CREST Regulations)

"CREST Regulations" or "Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 no. 3755), as amended
"CREST sponsor"	a CREST participant admitted to CREST as a CREST sponsor
"CREST sponsored member"	a CREST member admitted to CREST as a sponsored member
"Daily Official List"	the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange
"Disclosure and Transparency Rules"	the disclosure and transparency rules of the UK Listing Authority made in accordance with section 73A of the FSMA, as amended from time to time
"EEA"	the European Economic Area
"Effective"	if the Acquisition is implemented by way of the Scheme, the Scheme having become effective pursuant to its terms and the "Scheme becoming Effective" shall be construed accordingly
"Effective Date"	the date on which the Scheme becomes Effective, which is expected to be 19 March 2014
"Enlarged Group"	the Group, as enlarged by the Fusion IP Group (if the Scheme becomes Effective) following the Effective Date
"Enlarged Share Capital"	the issued ordinary share capital of the Company following completion of the Capital Raising (assuming, unless otherwise provided, that the Capital Raising is fully subscribed, and no provisional awards of Shares vest under the LTIP between the date of posting of this document and the completion of the Capital Raising) and that the Acquisition has not then completed
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Excess Application Facility"	the arrangement pursuant to which Qualifying Shareholders may apply for Open Offer Shares in excess of their Open Offer Entitlement provided they have agreed to take up their Open Offer Entitlement in full as set out in this document, in the case of Qualifying Non-CREST Shareholders, the Application Form
"Excess CREST Open Offer Entitlement"	in respect of each Qualifying CREST Shareholder, the entitlement (in addition to his Open Offer Entitlement) to apply for Excess Shares, credited to his stock account in CREST, pursuant to the Excess Application Facility, which is conditional on such Qualifying CREST Shareholder agreeing to take up its Open Offer Entitlement in full set out in this document
"Excess Shares"	the Open Offer Shares for which Qualifying Shareholders may apply under the Excess Application Facility as the same may be increased at the discretion of the Directors as set out in this Document
"Excluded Shares"	any Fusion IP Shares beneficially owned by IP Group or any of its subsidiary undertakings
"Excluded Territory" or "Excluded Territories"	Australia, Canada, Japan, New Zealand, the Republic of South Africa and the United States
"Existing Shares"	the Shares in issue as at the date of this document

"FCA"	the Financial Conduct Authority of the United Kingdom
"Firm Placed Shares"	the 30,303,030 new Shares to be allotted and issued by the Company pursuant to the Firm Placing
"Firm Placees"	any persons who have agreed to subscribe for Firm Placed Shares pursuant to the Firm Placing
"Firm Placing"	the conditional placing by Numis, on behalf of the Company, of the Firm Placed Shares pursuant to the Placing Agreement
"Form of Proxy"	the form of proxy accompanying this document for use by Shareholders in relation to the General Meeting
"FSMA"	the Financial Services and Markets Act 2000, as amended
"Fusion IP"	Fusion IP plc, a company incorporated in England and Wales with registered number 05275732
"Fusion IP Articles"	the articles of association of Fusion IP from time to time
"Fusion IP Board"	the board of directors of Fusion IP
"Fusion IP Directors"	the directors of Fusion IP
"Fusion IP General Meeting"	the general meeting of Fusion IP to be convened to consider and, if thought fit, pass, inter alia, the Fusion IP Resolutions
"Fusion IP Group"	Fusion IP and its subsidiary undertakings from time to time and "Fusion IP Group Company" shall mean any one of them
"Fusion IP Partnerships and Collaborations"	means the arrangements between Fusion IP and certain universities as referred to in paragraphs 2 and 3 of Part III to which the Group currently has partial access to under the co-investment arrangements referred to referred to in paragraph 15 of Part II and which the Enlarged Group will, from the Effective Date, have 100 per cent. access to
"Fusion IP Resolutions"	the resolutions to be proposed by Fusion IP at the Fusion IP General Meeting in connection with, amongst other things, the approval of the Scheme and confirmation of the Reduction of Capital, the amendment of Fusion IP's articles of association and such other matters as may be necessary to implement the Scheme and the cancellation of the admission to trading on AIM of the Fusion IP Shares
"Fusion IP Shareholders"	holders of Fusion IP Shares
"Fusion IP Shares"	the existing unconditionally allotted or issued and fully paid (or credited as fully paid) ordinary shares of 1 pence each in the capital of Fusion IP and any further shares which are unconditionally allotted or issued prior to the Effective Date
"General Meeting" or "IP Group General Meeting"	the general meeting of the Company convened for 10.00 a.m. on 12 February 2014, notice of which is set out in Part X of this document, and including any adjournment thereof
"Group"	(i) for the purposes of paragraph 12 of Part VII of this document (entitled "Working Capital") only: IP Group and its subsidiary undertakings, which prior to the Effective Date will exclude the Fusion IP Group and after the Effective Date will include the

	Fusion IP Group; and (ii) elsewhere in this document: IP Group and its subsidiary undertakings
"IAML"	Invesco Asset Management Limited of 30 Finsbury Square, London EC2A 1AG, a wholly owned subsidiary of Invesco Ltd
"IAS"	International Accounting Standards
"IASB"	International Accounting Standards Board
"IBME"	the University of Oxford's Institute of Biomedical Engineering
"IFRS"	International Financial Reporting Standards
	"Independent Fusion IP Shareholders" all Fusion IP Shareholders other than IP Group
"Intellectual Property"	means any and all patents, trade marks, rights in designs, get-up, trade, business or domain names, copyrights, and topography rights, (whether registered or not and any applications to register or rights to apply for registration of any of the foregoing), rights in inventions, know-how, trade secrets and other confidential information, rights in databases and all other intellectual property rights of a similar or corresponding character which may now or in the future subsist in any part of the world
"IP"	intellectual property
"IP2IPO Limited"	IP2IPO Limited, a company incorporated in England and Wales with registered number 04072979, being a wholly owned subsidiary of the Company
"IP2IPO Management Limited" or "IML"	IP2IPO Management Limited, a company incorporated in England and Wales with registered number 04368104, being a wholly owned subsidiary of the Company
"IP2IPO Management II Limited" or "IM2"	IP2IPO Management II Limited, a company incorporated in England and Wales with registered number 04709243, being a wholly owned subsidiary of the Company
"ISDX Markets"	the ISDX main board and the ISDX growth market, each operated by ICAP Securities and Derivatives Exchange Limited
"Issue"	the issue of New Shares pursuant to the Capital Raising
"Issue Price"	165 pence per New Share
"KB"	King's College London Business Limited, a company incorporated in England and Wales with registered number 02714181, being a wholly owned subsidiary of King's College London
"King's College London" or "KCL"	King's College London, a body corporate incorporated by Royal Charter
"King's College London Partnership" or "KCL Partnership"	the arrangements entered into on 12 November 2009 between (1) King's College London, (2) KB and (3) IP2IPO Limited, further details of which are set out in paragraph 15.3 of Part VII
"Listing Rules"	the listing rules made by the FCA under Part VI of FSMA, as amended from time to time

"Long Term Partnerships"	a long-term arrangement made by the Group with a university or other research intensive institution, including (where relevant) the University of Oxford Partnership, the University of Southampton Partnership, the King's College London Partnership, the University of Leeds Partnership, the University of Surrey Partnership, the University of Bristol Partnership, the CNAP Partnership, the University of York Partnership, the Queen Mary Partnership, the University of Bath Partnership and the University of Glasgow Partnership
"London Stock Exchange"	London Stock Exchange plc
"LTIP"	the Long-Term Incentive Plan adopted by the Shareholders at the annual general meeting in 2007, as amended with the approval of the Shareholders in 2011
"Meetings"	the Scheme Meeting and the Fusion IP General Meeting
"Member account ID"	the identification code or number attached to any member account in CREST
"Modern Biosciences"	Modern Biosciences plc, a company incorporated in England and Wales with registered number 0544023, being a subsidiary of the Company
"Money Laundering Regulations"	the Money Laundering Regulations 2007 (SI 2007/2157), as amended from time to time
"New Shares"	the Capital Raising Shares and/or the Consideration Shares as the case may be and "New Share" means any one of them
"Nomination Committee"	the nomination committee established by the Board
"Non-Firm Placees"	any persons who have agreed or shall agree to subscribe for Placing Shares pursuant to the Placing
"Notice of General Meeting"	the notice of General Meeting set out in Part X of this document
"Numis"	Numis Securities Limited of The London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT, acting as sponsor, financial adviser, underwriter and broker
	"Offer for Subscription Entitlement" an entitlement to apply for New Shares for Selected Subscription Applicants
"Offer for Subscription"	the offer for subscription to the public in the UK of New Shares on the terms set out in this document and subject to the conditions and (where applicable) the Subscription Form
"Offer for Subscription Shares"	the New Shares to be allotted and issued by the Company pursuant to the Offer for Subscription as the same may be increased or decreased at the discretion of the Directors as set out in this document
"Official List"	the Official List of the FCA pursuant to Part VI of FSMA
"Open Offer"	the offer to Qualifying Shareholders, constituting an invitation to apply for the Open Offer Shares, including pursuant to the Excess Application Facility, on the terms and subject to the conditions set

	out in this document and, in the case of Qualifying Non-CREST Shareholders, in the Application Form
"Open Offer Entitlement"	the pro rata entitlement of Qualifying Shareholders to apply for Open Offer Shares pursuant to the Open Offer
"Open Offer Shares"	the 15,151,826 new Shares to be offered to Qualifying Shareholders under the Open Offer
"Other Partnerships and Collaborations"	together (i) the Fusion IP Partnerships and Collaborations (ii) the University of Manchester Partnership, (iii) the arrangements with Technikos as referred to in paragraph 15.13.5 of Part VII; and (iv) the arrangements between the Group and each of Columbia and Penn, as referred to in paragraphs 15.17 and 15.18 of Part VII
"OUCD"	University of Oxford's Department of Chemistry
"Overseas Applicants"	persons who apply for New Shares under the Offer for Subscription with registered address outside the UK or who are citizens or residents of countries outside the UK
"Overseas Shareholders"	Shareholders and/or Scheme Shareholders (as the context permits) with a registered addresses outside the UK or who are citizens or residents of, or located in, countries outside the UK
"Panel"	the Panel on Takeovers and Mergers
"participant ID"	the identification code or membership number used in CREST to identify a particular CREST member or other CREST participant
"Partnerships"	together, the Long Term Partnerships and the Other Partnerships and Collaborations
"Placed Shares"	the Firm Placed Shares and those Placing Shares allotted by the Company to Non-Firm Placees pursuant to the Placing
"Placees"	the Firm Placees and the Non-Firm Placees
"Placing"	the subscription by the Non-Firm Placees for the Placing Shares
"Placing Agreement"	the placing agreement dated 23 January 2014 between (1) IP Group and (2) Numis, further details of which are set out in paragraph 15.19(a) of Part VII of this document
"Placing Shares"	the new Shares to be allotted and issued by the Company to Non Firm Placees pursuant to the Placing as the same may be increased or decreased at the discretion of the Directors as set out in this document
"Proposed Directors"	David Baynes and Douglas Liversidge
"Prospectus Rules"	the prospectus rules of the UK Listing Authority made in accordance with section 73A of FSMA, as amended from time to time
"Qualified Purchaser"	qualified purchaser, as defined in Section 2(a)(51) of the US Investment Company Act
"QMUL"	Queen Mary and Westfield College University of London, a body incorporated by Royal Charter

"QIB"	qualified institutional buyers, as defined in Rule 144A under the US Securities Act
"Qualifying CREST Shareholders"	Qualifying Shareholders holding Shares in uncertificated form in CREST
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Shares in certificated form
"Qualifying Shareholders"	Shareholders on the register of members of the Company at the Record Date with the exclusion (subject to certain exceptions) of persons with a registered address or located or resident in the US or an Excluded Territory
"Queen Mary Partnership"	the arrangements entered into on 20 July 2006 between (1) QMUL and (2) IP2IPO Limited, further details of which are set out in paragraph 15.9 of Part VII
"Record Date"	5.30 p.m. on 22 January 2014
"Reduction Court Hearing"	the hearing by the Court of the claim form to confirm the Capital Reduction
"Reduction Court Order"	the order of the Court under section 648 of the Companies Act confirming the Capital Reduction
"Reduction of Capital"	the proposed reduction of share capital of Fusion IP pursuant to the Scheme
"Registrar"	Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
"Registrar of Companies"	the Registrar of Companies in England and Wales
"Regulation D"	Regulation D under the US Securities Act
"Regulation S"	Regulation S under the US Securities Act
"Regulatory Information Service"	one of the regulatory information services authorised by the UK Listing Authority to receive, process and disseminate regulatory information in respect of listed companies
"Remuneration Committee"	the remuneration committee established by the Board
"Reorganisation Record Time"	the time and date at which a copy of the Scheme Court Order is delivered to the Registrar of Companies
"Resolutions"	the resolution to be proposed at the General Meeting (and set out in the Notice of General Meeting) being (1) any ordinary resolution to approve the Capital Raising, (2) ordinary resolution to authorise the Directors to allot New Shares pursuant to the Capital Raising and (3) a special resolution to disapply statutory pre-emption rights in relation to the allotment of equity securities pursuant to the Capital Raising
"Scheme"	the proposed scheme of arrangement under Part 26 of the Companies Act between Fusion IP and Scheme Shareholders to implement the Acquisition
"Scheme Admission"	the admission of the Consideration Shares (i) to the premium segment of the Official List and (ii) to trading on the London Stock

	Exchange's Main Market for listed securities, becoming effective, in accordance, respectively with LR 3.2.7G of the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards
"Scheme Court Hearing"	the hearing of the Court to sanction the Scheme under section 899 of the Companies Act
"Scheme Court Order"	the order of the Court sanctioning the Scheme under section 899 of the Companies Act
"Scheme Document"	the document to be despatched to Fusion IP Shareholders including the particulars required by section 897 of the Companies Act
"Scheme Shareholders"	holders of Scheme Shares
"Scheme Shares"	the Fusion IP Shares:
	(i) in issue at the date of the Scheme;
	(ii) issued after the date of the Scheme but before the Voting Record Time; and
	(iii) issued at or after the Voting Record Time and before the Reorganisation Record Time on terms that the original or any subsequent holder shall be, or shall have agreed in writing by such time to be, bound by the Scheme,
	in each case excluding any Excluded Shares
"Selected Subscription Applicants"	means a person invited by Numis to apply for Offer for Subscription Shares in the Offer for Subscription in CREST
"Shareholders" and each a "Shareholder"	holders of Shares
"Shares"	ordinary shares of 2 pence each in the capital of the Company
"Statement of Capital"	the statement of capital (approved by the Court) showing, with respect to Fusion IP's share capital as altered by the Reduction Court Order, the information required by section 649 of the Companies Act
"stock account"	an account within a member account in CREST in which a holding of a particular share or other security in CREST is admitted
"Subscription Form"	the application form in Appendix 4 to this document for use in connection with the Offer for Subscription
"Technikos"	Technikos LLP, a limited liability partnership registered in England and Wales with number OC319725
"Techtran"	Techtran Group Limited, a company incorporated in England and Wales with registered number 04544276, being a wholly owned subsidiary of the Company
"Top Technology Ventures"	Top Technology Ventures Limited, a company incorporated in England and Wales with registered number 1977742, being the venture capital fund management subsidiary of the Company
"UK Listing Authority" or "UKLA"	the FCA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA and in the exercise of its functions in respect of admission to the Official List

"uncertificated" or "in uncertificated form"	a share recorded on the Company's register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland
"United States" or "US"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
"University of Bath Partnership"	the arrangements entered into on 13 December 2007 between (1) the University of Bath, (2) IP2IPO Limited and (3) the Company, further details of which are set out in paragraph 15.10 of Part VII
"University of Bristol Partnership"	the arrangements entered into on 4 December 2005 between (1) the University of Bristol and (2) IP2IPO Limited, further details of which are set out in paragraph 15.6 of Part VII
"University of Cambridge"	the Chancellor, Masters and Scholars of the University of Cambridge
	"University of Glasgow Partnership" the arrangements entered into on 10 October 2006 between (1) the University Court of the University of Glasgow and (2) IP2IPO Limited, further details of which are set out in paragraph 15.11 of Part VII
"University of Leeds Partnership"	the arrangements entered into on 15 July 2005 (as varied by a supplemental agreement dated 17 March 2011) between (1) the University of Leeds, (2) Techtran and (3) the Company, further details of which are set out in paragraph 15.5 of Part VII
"University of Manchester Partnership"	the arrangements entered into on 25 February 2013 between the University of Manchester (2) the University of Manchester 13
	Limited and (3) IP2IPO Limited, further details of which are set out in paragraph 15.14 of Part VII
"University of Oxford"	the Chancellor, Masters and Scholars of the University of Oxford
"University of Oxford Equity Rights"	the right to future shares in spin-out companies from the University of Oxford's Chemistry Department with an original cost of £20.1 million
"University of Oxford Partnership"	the arrangements entered into on 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001) between (1) the University of Oxford and (2) IP2IPO Limited (and others), further details of which are set out in paragraph 15.1 of Part VII
"University of Southampton Partnership"	the arrangements entered into on 20 March 2002 (as subsequently varied) between (1) the University of Southampton, (2) University of Southampton Holdings Limited, (3) IP2IPO Limited, (4) IML and (5) Southampton Asset Management Limited, further details of which are set out in paragraph 15.2 of Part VII
"University of Surrey Partnership"	the arrangements entered into on 9 February 2006 between (1) the University of Surrey and (2) IP2IPO Limited, further details of which are set out in paragraph 15.7 of Part VII

"USE"	Unmatched Stock Event
"USE Instruction"	a USE instruction sent to Euroclear by Qualifying CREST Shareholders
"US Investment Company Act"	means the US Investment Company Act of 1940, as amended, and related rules
"US Securities Act"	the US Securities Act of 1933, as amended, and related rules
"US Securities and Exchange Commission"	the US government agency having primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market
"Voting Record Time"	6.00 p.m. on the day which is two days before the Scheme Meeting or, if the Scheme Meeting is adjourned, 6.00 p.m. on the second day before the date of such adjourned meeting.

All references to "pounds", "pounds sterling", "sterling", "£", "pence" and "p" are to the lawful currency of the UK.

All references in this document to times are, unless the context otherwise requires, references to the time in London, UK.

PART X

NOTICE OF GENERAL MEETING

IP Group plc

Incorporated in England and Wales with registered number 04204490

NOTICE IS HEREBY GIVEN that a GENERAL MEETING of IP Group plc (the "Company") will be held at the offices of the Company at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 12 February 2014 for the purposes of considering and, if thought fit, passing the following Resolutions of which resolutions 1 and 2 will be proposed as ordinary resolutions and Resolution 3 will be proposed as a special resolution.

Unless expressly stated otherwise, terms defined in the prospectus of the Company dated 27 January 2014 (the "Prospectus") shall have the same meaning when used in this Notice of General Meeting.

RESOLUTION 1 – APPROVAL OF CAPITAL RAISING

The terms of the Firm Placing and the Placing, the Open Offer (including the Excess Application Facility) and the Offer for Subscription (the "Capital Raising") as set out in the Prospectus be and are approved and the directors of the Company be and are hereby directed to implement the Capital Raising and generally and unconditionally authorised to exercise the powers conferred by this Resolution and all the powers of the Company to the extent that the directors of the Company (or a duly appointed committee thereof) determine it necessary or desirable to implement the Capital Raising.

RESOLUTION 2 – AUTHORITY TO ALLOT NEW SHARES IN CONNECTION WITH THE CAPITAL RAISING

Subject to the passing of Resolution 1, the directors of the Company be and are hereby generally and unconditionally authorised for the purposes of section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot equity securities (as defined in section 560(1) of the Companies Act 2006 up to an aggregate nominal amount of £1,212,121.20 in connection with one or more issues of New Shares pursuant to the Capital Raising, such authority to expire on the date three months after the passing of this resolution (save that the Company may before such expiry make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired). This authority is in addition to an existing such authority.

RESOLUTION 3 – DISAPPLICATION OF PRE-EMPTION RIGHTS FOR ISSUE OF CAPITAL RAISING SHARES

Subject to the passing of Resolutions 1 and 2, the directors of the Company be and are hereby empowered pursuant to section 570 of the Companies Act 2006 to allot equity securities (within the meaning of section 560 of that Act) as if section 561(1) of that Act did not apply to such allotment up to an aggregate nominal amount of £1,212,121.20 in connection with one or more issues of New Shares pursuant to the Capital Raising, such authority to expire on the date three months after the passing of this resolution (save that the Company may before such expiry make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired). This authority is in addition to any existing such authority.

By order of the Board

Angela Leach Company Secretary

27 January 2014

Notes:

• 1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the General Meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a shareholder of the Company but must attend the General Meeting to represent you. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and believe that you should have one, or if you require additional forms, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.
• 1. To be valid, the proxy form must be completed and lodged, together with the power of attorney or other authority (if any) under which it is signed, or a duly certified copy of such power or authority, with the Company's registrars, by hand only to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU or in accordance with the replied paid details, not less than 48 hours before the time appointed for holding the General Meeting.
• 1. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described in paragraph 9 below) will not prevent a shareholder attending the General Meeting and voting in person if he/she wishes to do so.
• 1. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. Such persons should direct any communications and enquiries to the registered holder of the shares by whom they were nominated and not to the Company or its registrars.
• 1. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company.
• 1. To be entitled to attend and vote at the General Meeting (and for the purpose of the determination by the Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company at 6.00 p.m. on 10 February 2014 (or, if the General Meeting is adjourned, such time being not more than 48 hours prior to the time fixed for the adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the General Meeting.
• 1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
• 1. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (CREST ID No. RA10) by 10.00 a.m. on 10 February 2014. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
• 1. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
• 1. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• 1. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided they do not do so in relation to the same shares.
• 1. In conjunction with its registrar, the Company has in place a facility to allow each shareholder to register proxy votes electronically. Detailed information of how to do this is set out on the form of proxy. A shareholder can register proxy votes electronically by either logging on to the registrars' website, www.capitashareportal.com and following the instructions, or, CREST members may register proxy votes following the procedures set out in the CREST Manual. To use the Registrars' Website www.capitashareportal.com, you will need to log in to your Share Portal account or register for the Share Portal if you have not

already done so. To register for the Share Portal you will need your investor code. Once registered you will immediately be able to vote.

• 1. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting for the question to be answered.
• 1. A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found at www.ipgroupplc.com/reports.
• 1. You may not use any electronic address provided either in the notice of General Meeting or any related documents (including the Chairman's letter and proxy form) to communicate for any purposes other than those expressly stated.
• 1. Mobile telephones may not be used in the meeting room, and cameras, tapes and video recorders are not allowed in the meeting room.
• 1. Your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder, including your name and contact details, the votes you cast and your reference number (as attributed to you by the Company or its registrars). The Company determines the purposes for which, and the manner in which, your personal data is to be processed. The Company and any third party to whom it discloses the data (including the Company's registrars) may process your personal data for the purposes of compiling and updating the Company's records, fulfilling its legal obligations and processing the shareholder rights you exercise.
• 1. As at 24 January 2014 (being the last business day prior to the publication of this Notice) the Company's issued share capital consists of 375,258,859 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 24 January 2014 are 375,258,859.

APPENDIX I

QUESTIONS AND ANSWERS ABOUT THE FIRM PLACING AND PLACING AND OPEN OFFER

The questions and answers set out in this Appendix I are intended to be in general terms only and, as such, you should read Appendices 2 and 3 to this document for full details of what action to take. If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank, fund manager, solicitor, accountant or other appropriate independent financial adviser who is authorised under the FSMA if you are resident in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.

This Appendix I deals with general questions relating to the Firm Placing and Placing and Open Offer and more specific questions relating principally to persons resident in the United Kingdom who hold their Shares in certificated form only. If you are an Overseas Shareholder, you should read paragraph 6 of Appendix 2 to this document and you should take professional advice as to whether you are eligible and/or you need to observe any formalities to enable you to take up your Open Offer Entitlement or apply for Excess Shares pursuant to the Excess Application Facility. If you hold your Existing Shares in uncertificated form (that is, through CREST) you should read Appendix 2 to this document for full details of what action you should take. If you are a CREST sponsored member, you should also consult your CREST sponsor. If you do not know whether your Existing Shares are in certificated or uncertificated form, please call the Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that, for legal reasons the Shareholder Helpline is only able to provide information contained in this document and information relating to the Company's register of members and is unable to give advice on the merits of the Capital Raising or provide legal, business, financial tax or investment advice.

The contents of this document should not be construed as legal, business, accounting, tax, investment or other professional advice. Each prospective investor should consult his, her or its own appropriate professional advisers for advice. This document is for your information only and nothing in this document is intended to endorse or recommend a particular course of action.

1. WHAT IS AN OPEN OFFER?

An open offer is a way for companies to raise money. Companies do this by giving their existing shareholders a right to acquire further shares at a fixed price in proportion to their existing shareholdings.

The Open Offer is an invitation by IP Group to Qualifying Shareholders to apply to subscribe, for 15,151,826 Open Offer Shares at a price of 165 pence per Open Offer Share. If you hold Shares on the Record Date or have a bona fide market claim (other than, subject to certain exceptions, where you are a Shareholder with a registered address in, or are located in, the United States or an Excluded Territory) you will be entitled to subscribe for Open Offer Shares under the Open Offer. If you hold Shares in certificated form, your entitlement will be set out in your Application Form.

The Open Offer is being made on the basis of 4.0377 Open Offer Shares for every 100 Existing IP Group Shares held by Qualifying Shareholders on the Record Date. If your entitlement to Open Offer Shares is not a whole number, you will not be entitled to subscribe for any fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number.

Open Offer Shares are being offered to Qualifying Shareholders in the Open Offer at a discount to the share price on the last dealing day before the details of the Open Offer were announced on 23 January 2014. The issue price of 165 pence per Open Offer Share represents a 8.3 per cent. discount to the closing middlemarket price quotation as derived from the Daily Official List of 179.9 pence per Share on 22 January 2014 (being the last dealing day before details of the Capital Raising were announced).

An Open Offer is not a rights issue and, therefore, if you are a Qualifying Shareholder and you do not wish to subscribe for Open Offer Shares to which you are entitled you will not be able to sell or transfer your entitlement to those Open Offer Shares.

Qualifying Shareholders are also being given the opportunity, provided they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility.

Qualifying Shareholders are also being given the opportunity to apply, under the Excess Application Facility, for Excess Shares in excess of their Open Offer Entitlements. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rate to the number of Excess Shares applied for.

Valid applications by Qualifying Shareholders will be satisfied in full up to the amount of their individual Open Offer Entitlement (excluding any New Shares applied for through the Excess Application Facility).

2. WHAT IS A FIRM PLACING

A Firm Placing is where specific institutional investors agree to subscribe for firm placed shares. A firm placing provides a company with certainty of new funds and an opportunity to introduce new institutional investors to its share register.

The Company proposes to issue 30,303,030 New Shares at a price of 165 pence per New Share under the Firm Placing. The New Shares under the Firm Placing do not form part of the Open Offer and are not subject to clawback. Unless you are a Firm Placee, you will not participate in the Firm Placing.

3. WHAT IS THE PLACING? AM I ELIGIBLE TO PARTICIPATE IN THE PLACING?

The Placing is with certain existing institutional and other new investors. The Placing Shares do not form part of the Open Offer. Unless you are a Placee you will not participate in the Placing.

4. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. HOW DO I KNOW I AM ELIGIBLE TO PARTICIPATE IN THE OPEN OFFER?

If you receive an Application Form and, subject to certain exceptions, are not a holder with a registered address in, or located in, the United States or any Excluded Territory, then you should be eligible to participate in the Open Offer as long as you have not sold all of your Existing Shares before 23 January 2014 (the time when the Existing Shares are expected to be marked "ex-entitlement" by the London Stock Exchange).

5. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. HOW DO I KNOW HOW MANY OPEN OFFER SHARES I AM ENTITLED TO TAKE UP?

If you hold your Existing Shares in certificated form and, subject to certain exceptions, do not have a registered address in, and are not located or resident in, the United States or any Excluded Territory, you will be sent an Application Form that shows:

• 5.1 how many Existing Shares you held on the Record Date;
• 5.2 how many Open Offer Shares are comprised in your Open Offer Entitlement; and
• 5.3 how much you need to pay if you want to take up in full your entitlement to Open Offer Shares.

If you are an Overseas Shareholder, subject to certain exceptions, you will not have received and will not receive an Application Form.

If you would like to apply for any or all of the Open Offer Shares, you should complete the Application Form in accordance with the instructions printed on it and the information provided in this document. Completed Application Forms should be returned, along with a cheque or banker's draft drawn in the appropriate form, in the accompanying pre-paid envelope or returned by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 10 February 2014, after which time Application Forms will not be valid. Please allow at least four Business Days for delivery if sent by first class post from within the UK.

6. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM AND AM ELIGIBLE TO RECEIVE AN APPLICATION FORM. WHAT ARE MY CHOICES IN RELATION TO THE OPEN OFFER?

6.1 If you do not want to take up your Open Offer Entitlement

If you do not want to take up the Open Offer Shares to which you are entitled, you do not need to do anything. In these circumstances, you will not receive any Open Offer Shares. You will also not receive any money when the Open Offer Shares you could have taken up are sold, as would happen under a rights issue. You cannot sell your Application Form or your Open Offer Entitlement to anyone else.

If you do not take up your Open Offer Entitlement, then following the issue of the Open Offer Shares pursuant to the Open Offer, your interest in the Company will be diluted by up to approximately 10.8 per cent. assuming that the size of the Capital Raising is £75 million and that it is fully subscribed.

6.2 If you want to take up some, but not all, of your Open Offer Entitlement

If you want to take up some, but not all, of the Open Offer Shares to which you are entitled, you should write the number of Open Offer Shares you want to take up in Box 6 of your Application Form. For example, if you are entitled to take up 100 shares but you only want to take up 50 shares, then you should write "50" in Box 2. To work out how much you need to pay for the Open Offer Shares, you need to multiply the number of Open Offer Shares you want (in this example, "50") by 165 pence, which is the price in pence of each Open Offer Share (giving you an amount of £82.50 in this example). You should write this amount in Box 9 and this should be the amount that your cheque or banker's draft is made out for. You should then sign the Application Form (ensuring that all joint holders sign (if applicable)) and return the completed Application Form, together with a cheque or banker's draft for the relevant amount, in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 10 February 2014, after which time Application Forms will not be valid.

6.3 If you want to take up all of your Open Offer Entitlement

If you want to take up all of the Open Offer Shares to which you are entitled, all you need to do is sign the Application Form (ensuring that all joint holders sign (if applicable)) and send the Application Form, together with your cheque or banker's draft for the amount (as indicated in Box 5 of your Application Form) made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C payee only", in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 11 February 2014, after which time Application Forms will not be valid. If you post your Application Form by first-class post, you should allow at least four Business Days for delivery.

6.4 If you want to apply for more than your Open Offer Entitlement

Provided that you have agreed to take up your Open Offer Entitlement in full, you can apply for further Open Offer Shares using the Excess Application Facility. You should write the number of Open Offer Shares that you wish to take up, including those for which you are applying under the Excess Application Facility in Box 8. In addition to completing the remainder of and signing the Application Form.

Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

6.5 How do I pay

All payments must be in pounds sterling and made by cheque or banker's draft made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C payee only". Cheques must be drawn on the personal account of the individual investor, which must have sole or joint title to the funds. Cheques or banker's drafts must be drawn in pounds sterling on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right hand corner and must be for the full amount payable for the application. Third party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder and the number of an account held in the applicant name at the building society or bank by stamping or endorsing the cheque or draft to such effect. The account name should be the same as that shown on the Application Form. Post-dated cheques will not be accepted. Third party cheques (other than building society cheques or banker's drafts where the building society or bank has confirmed that the relevant Qualifying Shareholder has title to the underlying funds) will be subject to the Money Laundering Regulations which will delay Shareholders receiving their Open Offer Shares.

Cheques or banker's drafts will be presented for payment upon receipt. The Company reserves the right to instruct Capita Asset Services, as receiving agent, to seek special clearance of cheques and banker's drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be paid on payments made before they are due. It is a term of the Open Offer that cheques shall be honoured on first presentation and the Company may elect to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker's drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

A definitive share certificate will then be sent to you for the Open Offer Shares that you take up. Your definitive share certificate for Open Offer Shares is expected to be despatched to you by 21 February 2014.

7. I HOLD MY EXISTING ORDINARY SHARES IN UNCERTIFICATED FORM IN CREST. WHAT DO I NEED TO DO IN RELATION TO THE OPEN OFFER?

CREST members should follow the instructions set out in Part I of this document. Persons who hold Existing Shares through a CREST member should be informed by the CREST member through which they hold their Existing Shares of the number of Open Offer Shares which they are entitled to take up or apply for under their Open Offer Entitlement and their Excess CREST Open Offer Entitlement respectively, and should contact them if they do not receive this information.

8. I ACQUIRED MY EXISTING SHARES PRIOR TO THE RECORD DATE AND HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT IF I DO NOT RECEIVE AN APPLICATION FORM OR I HAVE LOST MY APPLICATION FORM?

If you do not receive an Application Form but hold your Existing Shares in certificated form, this probably means that you are not eligible to participate in the Open Offer. Some Qualifying Non-CREST Shareholders, however, will not receive an Application Form but may still be eligible to participate in the Open Offer, namely:

• 8.1 Qualifying CREST Shareholders who held their Existing Shares in uncertificated form on 22 January 2014 and who have converted them to certificated form;
• 8.2 Qualifying Non-CREST Shareholders who bought Existing Shares before 8.00 a.m. on 23 January 2014 but were not registered as the holders of those shares at the close of business on 22 January 2014; and
• 8.3 certain Overseas Shareholders.

If you do not receive an Application Form but think that you should have received one, or you have lost your Application Form, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal business, accounting, tax, investment or other professional advice.

9. I AM A QUALIFYING SHAREHOLDER, DO I HAVE TO APPLY FOR ALL THE OPEN OFFER SHARES I AM ENTITLED TO APPLY FOR?

You can take up any number of the Open Offer Shares allocated to you under your Open Offer Entitlement. Your maximum Open Offer Entitlement is shown on your Application Form. Any applications by a Qualifying Shareholder for a number of Open Offer Shares which is equal to or less than that person's Open Offer Entitlement will be satisfied, subject to the Open Offer becoming unconditional. If you decide not to take up all of the Open Offer Shares comprised in your Open Offer Entitlement, then your proportion of the ownership and voting interest in IP Group will be reduced. Please refer to the answer to question 14 for further information.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST, they will have limited settlement capabilities (for the purposes of market claims only), the Open Offer Entitlements will not be tradable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholders originally entitled or by a person entitled by virtue of a bona fide market claim. Open Offer Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their Open Offer Entitlement will have no rights under the Open Offer or receive any proceeds from it.

10. WHAT IF I CHANGE MY MIND?

If you are a Qualifying Non-CREST Shareholder, once you have sent your Application Form and payment to the Registrar you cannot withdraw your application or change the number of Open Offer Shares for which you have applied, except in the very limited circumstances which are set out in Appendix 2 of this document.

11. WHAT IF THE NUMBER OF OPEN OFFER SHARES TO WHICH I AM ENTITLED IS NOT A WHOLE NUMBER? AM I ENTITLED TO FRACTIONS OF OPEN OFFER SHARES?

If the number is not a whole number, you will not receive a fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number. The resulting fractions of Open Offer Shares will be aggregated and placed for the benefit of the Company.

12. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT SHOULD I DO IF I WANT TO SPEND MORE OR LESS THAN THE AMOUNT SET OUT IN BOX 5 OF THE APPLICATION FORM?

If you want to spend less than the amount set out in Box 5, you should divide the amount you want to spend by 165 pence, (being the price in pence of each Open Offer Share under the Open Offer). This will give you the number of Open Offer Shares you should apply for. You can only apply for a whole number of Open Offer Shares. For example, if you want to spend £100 you should divide £100 by 165 pence. You should round that down to the nearest whole number to give you the number of shares you want to take up and write that number in Box 6 and in Box 8. To then get an accurate amount to put on your cheque or banker's draft, you should multiply the whole number of Open Offer Shares you want to apply for by 165 pence and then fill in that amount in Box 9 and on your cheque or banker's draft accordingly.

Under the Excess Application Facility, provided that you are a Qualifying Non-CREST Shareholder and you have agreed to take up your Open Offer Entitlement in full, you may apply for more than the amount of your Open Offer Entitlement should you wish to do so.

You should note that the number of available Open Offer Shares under the Excess Application Facility is dependant on the level of take up of Open Offer Entitlements. Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements or the Directors decide to re-allocate shares from the Placing or Offer for Subscription or increase the size of the Capital Raising and allocate part of that increase to the Excess Application Facility. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. If every Qualifying Shareholder takes up their Open Offer Entitlements in full there will be no Open Offer Shares available under the Excess Application Facility. Qualifying Non-CREST Shareholders whose applications under the Excess Application Facility scaled back will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to them, under the Excess Application Facility multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

13. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT SHOULD I DO IF I HAVE SOLD SOME OR ALL OF MY EXISTING SHARES?

If you hold shares in the Company directly, and you have sold or sell some or all of your Existing Shares before 5.30 p.m. on 22 January 2014, you should contact the buyer or the person/company through whom you sold your shares. The buyer may be entitled to apply for Open Offer Shares under the Open Offer. If you sell any of your Existing Shares on or after 5.30 p.m. on 22 January 2014, you may still take up and apply for the Open Offer Shares as set out on your Application Form.

14. WILL THE EXISTING SHARES THAT I HOLD NOW BE AFFECTED BY THE OPEN OFFER?

If you decide not to apply for any of the Open Offer Shares to which you are otherwise entitled under the Open Offer, or you only apply for some of your entitlement, your proportionate ownership and voting interest in the Company will be reduced.

15. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHEN DO I HAVE TO DECIDE IF I WANT TO APPLY FOR OPEN OFFER SHARES?

Capita Asset Services must receive the Application Form by no later than 11.00 a.m. on 11 February 2014, after which time Application Forms will not be valid. If an Application Form is being sent by first-class post in the UK, Qualifying Shareholders are recommended to allow at least four Business Days for delivery.

16. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHEN WILL I RECEIVE MY NEW SHARE CERTIFICATE?

It is expected that the Registrar will post all new share certificates by 21 February 2014.

17. HOW DO I TRANSFER MY ENTITLEMENTS INTO THE CREST SYSTEM?

If you are a Qualifying Non-CREST Shareholder, but are a CREST member and want your Open Offer Shares to be in uncertificated form, you should complete the CREST deposit form (contained in the Application Form) and ensure it is delivered to CCSS in accordance with the instructions in the Application Form. CREST sponsored members should arrange for their CREST sponsors to do this.

18. IF I BUY EXISTING SHARES AFTER THE RECORD DATE, WILL I BE ELIGIBLE TO PARTICIPATE IN THE OPEN OFFER?

If you bought your Existing Shares after the Record Date, you are unlikely to be able to participate in the Open Offer in respect of such Existing Shares. If you are in any doubt, please consult your stockbroker, bank manager or other appropriate financial adviser.

19. WILL THE PLACING AND OPEN OFFER AFFECT DIVIDENDS ON THE EXISTING SHARES?

The Capital Raising Shares will, when issued and fully paid, rank equally in all respects with Existing Shares, including with regard to the right to receive all dividends or other distributions made, paid or declared, if any, by reference to a record date after the date of their issue.

20. WILL I BE TAXED IF I TAKE UP MY ENTITLEMENTS?

Information on taxation with regard to the Open Offer is set out in paragraph 14 of Part VII of this document. This information is intended as a general guide only and Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser immediately.

21. WHAT SHOULD I DO IF I LIVE OUTSIDE THE UNITED KINGDOM?

Your ability to apply to acquire Open Offer Shares may be affected by the laws of the country in which you live and you should take professional advice as to whether you require any governmental or other consents or need to observe any other formalities to enable you to take up your Open Offer Entitlement. Shareholders with registered addresses in, or who are located or resident in, the United States or any Excluded Territory are, subject to certain exceptions, not eligible to participate in the Open Offer. Your attention is drawn to the information in paragraph 6 of Appendix 2 of this document.

22. FURTHER ASSISTANCE

Should you require further assistance, please call Capita Asset Services on 0871 664 0321 from within the UK or on + 44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that, for legal reasons, the Shareholder Helpline is only able to provide information contained in this document and information relating to the Company's register of members and is unable to give advice on the merits of the Capital Raising or to provide legal, business, accounting, tax, investment or other professional advice. Calls may be recorded and monitored for security and training purposes.

APPENDIX 2

TERMS AND CONDITIONS OF THE OPEN OFFER

1. INTRODUCTION

As explained in Part I of this document, the Company is proposing to issue up to 45,454,856 Capital Raising Shares to raise approximately £75.0 million (before expenses) through the Firm Placing, Placing, Open Offer and Offer for Subscription with the ability for the Board to increase the size of the Capital Raising by up to one third to approximately £100.0 million (approximately £97.4 million net of expenses).

Assuming the Capital Raising size is of approximately £75.0 million, of the Capital Raising Shares being issued, 30,303,030 will be issued through the Firm Placing and up to 15,151,826 will be issued through the Placing, Open Offer and Offer for Subscription.

Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Save for certain institutional Shareholders, Qualifying Shareholders are not being offered the right to subscribe for the Firm Placed Shares or the Placing Shares.

This Appendix 2 and, for certificated Shareholders, the accompanying Application Form, contain the formal terms and conditions of the Open Offer. Your attention is drawn to the letter from the Chairman in Part I of this document which sets out the background to and reasons for the Capital Raising.

Upon completion of the Capital Raising (assuming a size of £75.0 million and that it is fully subscribed), the Capital Raising Shares will represent approximately 10.8 per cent. of the Enlarged Share Capital and the Existing Shares will represent approximately 89.2 per cent. of the Enlarged Share Capital. New Shares issued as part of the Firm Placing will account for approximately 7.2 per cent. of the Enlarged Share Capital and the Placing, Open Offer and Offer for Subscription (assuming they are fully subscribed) will account for approximately 3.6 per cent. of the Enlarged Share Capital.

The Open Offer is an opportunity for Qualifying Shareholders to apply for, in aggregate, 15,151,826 Open Offer Shares pro rata to their current holdings and, pursuant to the Excess Application Facility, to apply for Excess Shares, at the issue price of 165 pence per New Share in accordance with the terms of the Open Offer.

The Open Offer Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Capital Raising Admission and otherwise in all respects will rank equally with the Existing Shares.

The Record Date for entitlements under the Open Offer for Qualifying CREST Shareholders and Qualifying Non-CREST Shareholders is 5.00 p.m. on Monday, 22 January 2014. Application Forms for Qualifying Non-CREST Shareholders accompany this document and Open Offer Entitlements and Excess CREST Open Offer Entitlements are expected to be credited to stock accounts of Qualifying CREST Shareholders in CREST as soon as practicable after 8.00 a.m. on 28 January 2014. The latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate) is expected to be 11.00 a.m. on 11 February 2014 with Capital Raising Admission and commencement of dealings in Open Offer Shares expected to take place at 8.00 a.m. on 14 February 2014.

The Capital Raising is conditional on Shareholders passing the Resolutions at the General Meeting.

This document and, for Qualifying Non-CREST Shareholders only, the Application Form contains the formal terms and conditions of the Open Offer. Your attention is drawn to paragraph 2 of this Appendix 2, which gives details of the procedure for application and payment for the Open Offer Shares including any Excess Shares applied for pursuant to the Excess Application Facility. The attention of Overseas Shareholders is drawn to paragraph 6 of this Appendix 2 below.

The Placing, Open Offer and Offer for Subscription are not underwritten.

Any Qualifying Shareholder who has sold or transferred all or part of his/her registered holding(s) of Existing Shares prior to 5.00 p.m. on 22 January 2014 is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares under the Open Offer may be a benefit which may be claimed from him/her by the purchaser(s) under the rules of the London Stock Exchange.

Application has been made to the FCA for the Open Offer Shares to be admitted to the Official List and to the London Stock Exchange for the Open Offer Shares to be admitted to trading on the London Stock Exchange's main market for listed securities.

2. THE OPEN OFFER

Subject to the terms and conditions set out below (and, in the case of Qualifying Non-CREST Shareholders, in the Application Form), Qualifying Shareholders are being given the opportunity to apply for any number of Open Offer Shares at the Issue Price (payable in full on application and free of all expenses) up to a maximum of their pro rata entitlement which shall be calculated on the basis of:

4.0377 Open Offer Share for every 100 Existing Shares

registered in the name of each Qualifying Shareholder on the Record Date and so in proportion for any greater or lesser number of Existing Shares then held.

The Open Offer Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Capital Raising Admission and otherwise will rank equally with the Existing Shares. The Open Offer Shares are not being made available in whole or in part to the public except under the terms of the Open Offer.

Fractions of Open Offer Shares will not be offered to Qualifying Shareholders. Entitlements will be rounded down to the nearest whole number of Open Offer Shares and any fractional entitlements to Open Offer Shares that would otherwise have arisen will be aggregated and made available in the Excess Application Facility.

Qualifying Shareholders are also being given the opportunity, provided that they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility. Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements or the Directors decide to exercise their discretion to increase the size of the Issue and allocate some or all of the additional new Shares to the Excess Application Facility. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

Valid applications by Qualifying Shareholders will be satisfied in full up to the maximum amount of their individual Open Offer Entitlement (excluding any Excess Shares applied for through the Excess Application Facility).

Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Open Offer, as will holdings under different designations and in different accounts.

If you are a Qualifying Non-CREST Shareholder, the Application Form shows the number of Existing Shares registered in your name on the Record Date (in Box 3) and also shows the maximum number of Shares for which you are entitled to apply if you take up your Open Offer Entitlement in full (in Box 4).

Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST and should refer to paragraph 4.2 of this Appendix 2 and also to the CREST Manual for further information on the relevant CREST procedures.

Qualifying Shareholders may apply for any number of Open Offer Shares up to the maximum to which they are entitled under the Open Offer and may apply for any number of Excess Shares pursuant to the Excess Application Facility, save that the maximum amount of New Shares to be allotted under the Excess Application Facility will be limited by the maximum size of the Capital Raising (as may be increased by the Directors by up to one third to approximately £100.0 million) less the aggregate of the Firm Placed Shares, the New Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any New Shares that the Directors determine to issue under the Placing and/or the Offer for Subscription.

If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

Excess applications may be allocated in such manner as the Directors may determine in their absolute discretion and no assurance can be given that excess applications by Qualifying Shareholders will be met in full or in part or at all.

Assuming that the size of the Capital Raising is £75.0 million, if a Qualifying Shareholder does not take up his Open Offer Entitlement in full, such Qualifying Shareholder's holding will be diluted by up to approximately 10.8 per cent. as a result of the Capital Raising assuming it is fully subscribed. Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlements in full in respect of the Open Offer (and does not receive any other New Shares pursuant to the Capital Raising) will suffer dilution of approximately 7.2 per cent. to his shareholding in the Company as a result of the Firm Placing.

If the Directors increase the Capital Raising by one third through the issue of a further 15,151,204 Capital Raising Shares at the Issue Price, the size of the Capital Raising will be approximately £100.0 million and if a Qualifying Shareholder does not take up his Open Offer Entitlements in full, such Qualifying Shareholder's holding will be diluted by up to approximately 13.9 per cent. as a result of the Capital Raising. Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlement in full in respect of the Open Offer (and does not receive any other New Shares pursuant to the Capital Raising) will suffer dilution of approximately 10.4 per cent. to his shareholding in the Company as a result of the Firm Placing.

Any Open Offer Shares not applied for under the Open Offer may be allocated by the Directors to the Placing and/or the Offer for Subscription and the net proceeds held for the benefit of the Company.

The Open Offer will remain open for acceptance until 11.00 a.m. on 11 February 2014.

Any Qualifying Shareholder who validly completes and returns an Application Form or requests registration of the Open Offer Shares comprised therein, or who is a CREST member or CREST sponsored member who makes or is treated as making a valid acceptance in accordance with the procedures set out in this Appendix 2 will be deemed to make the representations and warranties to the Company contained in paragraph 4.1.5 of this Appendix 2.

The attention of Overseas Shareholders or any person (including, without limitation, a custodian, nominee or trustee) who has a contractual or other legal obligation to forward this document into a jurisdiction other than the UK is drawn to paragraph 6 of this Appendix 2. Subject to certain limited exceptions, the Placing and Open Offer will not be made into certain territories. Subject to the provisions of paragraph 6, Shareholders with a registered address in the US or an Excluded Territory will not be sent an Application Form.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. Qualifying Non-CREST Shareholders should also note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be credited to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Open Offer Shares not applied for under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up Open Offer Shares will have no rights under the Open Offer.

The Existing Shares are already admitted to CREST. No further application for admission to CREST is accordingly required for the New Shares. All Shares, when issued and fully paid, may be held and transferred by means of CREST.

Application has been made for the Open Offer Entitlements and the Excess CREST Open Offer Entitlements to be credited to Qualifying CREST Shareholders' CREST accounts. The Open Offer Entitlements and the Excess CREST Open Offer Entitlements are expected to be credited to CREST accounts on 28 January 2014.

3. CONDITIONS AND FURTHER TERMS OF THE OPEN OFFER

The Open Offer is conditional, inter alia, upon:

• 3.1 the passing, without amendment, of the Resolutions at the General Meeting;
• 3.2 Capital Raising Admission taking place by no later than 8.00 a.m. on 14 February 2014 (or such later time and date as the Company and Numis may agree); and
• 3.3 the Placing Agreement having become unconditional in all respects (save for the condition relating to Capital Raising Admission) and not having been terminated in accordance with its terms.

Accordingly, if these and the other conditions to the Open Offer are not satisfied or waived (where capable of waiver) by 14 February 2014, the Capital Raising will not proceed and any applications made by Qualifying Shareholders will be rejected. In such circumstances, application monies received by the Receiving Agent in respect of the Open Offer will be returned (at the applicant's sole risk), without payment of interest, as soon as practicable thereafter. The Capital Raising will not be revoked after Capital Raising Admission.

No temporary documents of title will be issued in respect of Open Offer Shares held in uncertificated form. Definitive certificates in respect of Open Offer Shares taken up are expected to be posted to those Qualifying Shareholders who have validly elected to hold their Open Offer Shares in certificated form by 21 February 2014. In respect of those Qualifying Shareholders who have validly elected to hold their Open Offer Shares in uncertificated form, the Open Offer Shares are expected to be credited to their stock accounts maintained in CREST by 8.00 a.m. 14 February 2014.

Applications will be made to the UKLA for the Capital Raising Shares to be listed on the premium segment of the Official List and to the London Stock Exchange for the Capital Raising Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. Capital Raising Admission is expected to occur on 14 February 2014, when dealings in the Capital Raising Shares are expected to begin.

All monies received by the Receiving Agent in respect of Open Offer Shares will be placed on deposit in a non-interest bearing account by the Receiving Agent.

If for any reason it becomes necessary to adjust the expected timetable as set out in this document, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates.

4. PROCEDURE FOR APPLICATION AND PAYMENT

If you are in any doubt as to the action you should take, or the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent adviser duly authorised under FSMA if you are in the UK or if not another appropriate independent professional adviser who specialises in advising on the acquisition of shares and other securities.

The action to be taken by Qualifying Shareholders in respect of the Open Offer depends on whether, at the relevant time, such Qualifying Shareholder has an Application Form in respect of his or her entitlement under the Open Offer, including the Excess Application Facility, or has had Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to his or her CREST stock account in respect of such entitlement. Qualifying Shareholders who have validly elected to hold their Existing Shares in certificated form and who hold such shares on the Record Date will, subject as provided in paragraph 6 of this Appendix 2, receive an Application Form. Qualifying Shareholders who have validly elected to hold Existing Shares in uncertificated form will not receive an Application Form but will receive a credit to their stock account in CREST of their Open Offer Entitlements equal to the maximum number of Open Offer Shares for which they are entitled to apply under the Open Offer.

CREST sponsored members should refer to their CREST sponsor as only their CREST sponsor will be able to take the necessary action specified below to apply under the Open Offer in respect of the Open Offer Entitlements and Excess CREST Open Offer Entitlements of such members held in CREST. CREST members who wish to apply under the Open Offer in respect of their Open Offer Entitlements and Excess CREST Open Offer Entitlements in CREST should refer to the CREST Manual for further information on the CREST procedures referred to below.

Qualifying Shareholders who do not want to apply for the Open Offer Shares under the Open Offer should take no action and should not complete or return the Application Form. Qualifying Shareholders are, however, encouraged to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy enclosed with this document.

4.1 If you have an Application Form in respect of your entitlement under the Open Offer

4.1.1 General

Subject as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, Qualifying Non-CREST Shareholders will receive an Application Form. The Application Form shows the number of Existing Shares registered in their name on the Record Date in Box 3. It also shows the maximum number of Open Offer Shares for which they are entitled to apply under the Open Offer, as shown by the total number of Open Offer Entitlements allocated to them set out in Box 4. Box 5 shows how much they would need to pay if they wish to take up their Open Offer Entitlements in full. Qualifying Non-CREST Shareholders may apply for less than their Open Offer Entitlement should they wish to do so. Qualifying Non-CREST Shareholders may also hold such an Application Form by virtue of a bona fide market claim.

Under the Excess Application Facility, provided they have agreed to take up their Open Offer Entitlement in full, Qualifying Shareholders may apply for more than the amount of their Open Offer Entitlement should they wish to do so. If you are in any doubt as to the action you should take, or the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent adviser duly authorised under FSMA if you are in the UK or if not another appropriate independent professional adviser who specialises in advising on the acquisition of shares and other securities.

The instructions and other terms set out in the Application Form, form part of the terms of the Open Offer in relation to Qualifying Non-CREST Shareholders.

4.1.2 bona fide market claims

Applications to acquire Open Offer Shares may only be made on the Application Form and may only be made by the Qualifying Non-CREST Shareholder named in it or by a person entitled by virtue of a bona fide market claim in relation to a purchase of Existing Shares through the market prior to the date upon which the Existing Shares will be marked "ex" the entitlement to participate in the Open Offer. Application Forms may not be assigned, transferred or split, except to satisfy bona fide market claims the latest time for which is 3.00 p.m. on 7 February 2014. The Application Form is not a negotiable document and cannot be separately traded. A Qualifying Non-CREST Shareholder who has sold or otherwise transferred all or part of his or her holding of Existing Shares prior to the date upon which the Existing Shares were marked "ex" the entitlement to participate in the Open Offer, should consult his broker or other professional adviser as soon as possible as the invitation to acquire Open Offer Shares under the Open Offer may be a benefit which may be claimed by the transferee. Qualifying Non-CREST Shareholders who have sold or otherwise transferred all of their registered holdings should, if the market claim is to be settled outside CREST, complete Box 10 on the Application Form and immediately send it (together with this document) to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee in accordance with the instructions set out in the Application Form. Qualifying Non CREST Shareholders who have sold or otherwise transferred some only of the Existing Shares shown in Box 3 on the Application Form prior to 22 January 2014, should contact the stockbroker, bank or other agent through whom the sale or transfer was effected to arrange for split Application Forms to be obtained. Subject to certain exceptions, the Application Form should not, however, be forwarded to, or transmitted in or into, the United States or any Excluded Territory. If the market claim is to be settled outside CREST, the beneficiary of the claim should follow the procedures set out in the accompanying Application Form. If the market claim is to be settled in CREST, the beneficiary of the claim should follow the procedure set out in paragraph 4.2 of this Appendix 2 below.

4.1.3 Application procedures

Qualifying Non-CREST Shareholders wishing to apply to acquire all or any of the Open Offer Shares in respect of their Open Offer Entitlement (or any shares under the Excess Application Facility) should complete the Application Form in accordance with the instructions printed on it.

Qualifying Non-CREST Shareholders may only apply for Excess Shares under the Excess Application Facility if they have agreed to take up their Open Offer Entitlement in full. The total number of Open Offer Shares is fixed and will not be increased save to the extent that the Directors increase the size of the Capital Raising and allocate part of that increase to the Excess Application Facility. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and the extent that the Directors increase the size of the Capital Raising and allocate further new Shares to the Excess Application Facility. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will be returned to the Applicant (at the Applicant's risk) without interest as soon as practicable thereafter by way of cheque.

Completed Application Forms should be posted in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal business hours only) to Capita so as to be received by no later than 11.00 a.m. on 11 February 2014, after which time Application Forms will not be valid (subject to certain exceptions described below). Application Forms delivered by hand will not be checked and no receipt will be provided. Qualifying Non-CREST Shareholders should note that applications, once made, will be irrevocable and receipt thereof will not be acknowledged. If an Application Form is being sent by first-class post in the UK, Qualifying Shareholders are recommended to allow at least four Business Days for delivery.

All payments must be in pounds sterling and made by cheque or banker's draft made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C Payee Only". Cheques must be drawn on the personal account of the individual investor who must have sole or joint title to the funds. Cheques or banker's drafts must be drawn in pounds sterling and on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right hand corner and must be for the full amount payable on application. Third party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the cheque or draft to such effect. The account name should be the same as that shown on the application. Post-dated cheques will not be accepted. Third party cheques (other than building society cheques or banker's drafts where the building society or bank has confirmed that the relevant Qualifying Shareholder has title to the underlying funds) will be subject to the Money Laundering Regulations which would delay Shareholders receiving their Open Offer Shares (please see paragraph 5 below).

Cheques or banker's drafts will be presented for payment upon receipt. The Company reserves the right to instruct Capita Asset Services, as receiving agent to seek special clearance of cheques and banker's drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be paid on payments made before they are due. It is a term of the Open Offer that cheques shall be honoured on first presentation and the Company may elect to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker's drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

If cheques or banker's drafts are presented for payment before all of the conditions of the Capital Raising are fulfilled, the application monies will be kept in a separate interest bearing bank account with any interest being retained for the Company until all conditions are met. If the Capital Raising does not become unconditional, no Open Offer Shares will be issued and all monies will be returned (at the applicant's sole risk), without payment of interest, to applicants as soon as practicable following the lapse of the Capital Raising.

The Company may in its sole discretion, but with the prior consent of Numis, treat an Application Form as valid and binding on the person by whom or on whose behalf it is lodged, even if not completed in accordance with the relevant instructions or not accompanied by a valid power of attorney where required, or if it otherwise does not strictly comply with the terms and conditions of the Open Offer. The Company further reserves the right (but shall not be obliged), with the prior consent of Numis to accept either:

• (a) Application Forms received after 11.00 a.m. on 11 February 2014; or
• (b) applications in respect of which remittances are received before 11.00 a.m. on 10 February 2014 from authorised persons (as defined in the FSMA) specifying the Open Offer Shares applied for and undertaking to lodge the Application Form in due course but, in any event, within two Business Days.

Multiple applications will not be accepted. All documents and remittances sent by post by or to an applicant (or as the applicant may direct) will be sent at the applicant's own risk.

If Open Offer Shares have already been allotted to a Qualifying Non-CREST Shareholder and such Qualifying Non-CREST Shareholder's cheque or banker's draft is not honoured upon first presentation or such Qualifying Non-CREST Shareholder's application is subsequently otherwise deemed to be invalid, the Registrar shall be authorised (in its absolute discretion as to manner, timing and terms) to make arrangements, on behalf of the Company, for the sale of such Qualifying Non-CREST Shareholder's Open Offer Shares and for the proceeds of sale (which for these purposes shall be deemed to be payments in respect of successful applications) to be paid to and retained by the Company. None of the Registrar, Numis or the Company, nor any other person, shall be responsible, or have any liability, for any loss, expense or damage suffered by such Qualifying Non-CREST Shareholder as a result.

4.1.4 Excess Application Facility

Provided Qualifying Non-CREST Shareholders choose to take up their Open Offer Entitlement in full, the Excess Application Facility enables a Qualifying Non-CREST Shareholder to apply for Excess Shares.

The total number of Open Offer Shares is fixed and will not be increased save to the extent that the Directors exercise their discretion to increase the size of the Capital Raising and allocate part of that increase to the Excess Application Facility. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and the extent that the Directors increase the size of the Capital Raising and allocate further new Shares to the Excess Application Facility. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will returned to the Applicant (at the Applicant's risk) without interest as soon as practicable thereafter by way of cheque.

Qualifying Non-CREST Shareholders who wish to apply for Open Offer Shares in excess of their Open Offer Entitlement must complete the Application Form in accordance with the instructions set out on the Application Form.

Qualifying Non-CREST Shareholders who make applications for Excess Shares under the Excess Application Facility which are not met in full and from whom payment in full has been made will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to, the relevant Qualifying Non-CREST Shareholder, multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

Fractions of Excess Shares will not be issued under the Excess Application Facility and fractions of Excess Shares will be round down to the nearest whole number.

4.1.5 Effect of application

By completing and delivering an Application Form, the applicant:

• (a) represents and warrants to the Company and Numis that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights and perform his obligations under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;
• (b) agrees with the Company and Numis that all applications under the Open Offer and any contracts or non-contractual obligations resulting therefrom shall be governed by, and construed in accordance with, the laws of England;
• (c) confirms to the Company and Numis that in making the application he is not relying on any information or representation in relation to the Group other than that contained in (or incorporated by reference in) this document and the applicant accordingly agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all information in relation to the Group contained (or incorporated by reference) in this document;
• (d) confirms to the Company and Numis that no person has been authorised to give any information or to make any representation concerning the Group and/or the New Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be, and has not been, relied upon as having

been authorised by the Company or Numis;

• (e) represents and warrants to the Company and Numis that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlements or that he received such Open Offer Entitlements by virtue of a bona fide market claim;
• (f) represents and warrants to the Company and Numis that if he has received some or all of his Open Offer Entitlements from a person other than the Company he is entitled to apply under the Open Offer in relation to such Open Offer Entitlements by virtue of a bona fide market claim;
• (g) requests that the Open Offer Shares to which he will become entitled, be issued to him on the terms set out in this document and the Application Form and subject to the Articles;
• (h) represents and warrants to the Company and Numis that he is not, nor is he applying on behalf of any person who is, in the United States or is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the United States or any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law and he is not applying with a view to reoffering, re-selling, transferring or delivering any of the Open Offer Shares which are the subject of his application in the United States or to, or for the benefit of, a person who is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the United States or any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law (except where proof satisfactory to the Company has been provided to the Company that he is able to accept the invitation by the Company free of any requirement which it (in its absolute discretion) regards as unduly burdensome), nor acting on behalf of any such person on a non discretionary basis nor person(s) otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares under the Open Offer;
• (i) represents and warrants to the Company and Numis that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986; and
• (j) confirms to the Company and Numis that in making the application, he is not relying and has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or his investment decision.

All enquiries in connection with the procedure for application and completion of the Application Form should be made to Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal or tax advice.

Qualifying Non-CREST Shareholders who do not want to take up or apply for the Open Offer Shares under the Open Offer should take no action and should not complete or return the Application Form. Qualifying Non-CREST Shareholders are, however, encouraged to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy enclosed with this document.

4.2 If you have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to your stock account in CREST in respect of your entitlement under the Open Offer

4.2.1 General

Subject as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, each Qualifying CREST Shareholder will receive a credit to his stock account in CREST of his Open Offer Entitlement equal to the maximum number of Open Offer Shares for which he is entitled to apply to acquire under the Open Offer and also an Excess CREST Open Offer Entitlement (see paragraph 4.2.3 below for further details).

The CREST stock account to be credited will be the account under the participant ID and member account ID which applies to the Existing Shares held on the Record Date by the Qualifying CREST Shareholder in respect of which the Open Offer Entitlements and Excess CREST Open Offer Entitlements have been allocated.

If for any reason the Open Offer Entitlements and/or Excess CREST Open Offer Entitlements cannot be admitted to CREST by, or the stock accounts of Qualifying CREST Shareholders cannot be credited by 3.00 p.m. on 28 January 2014, or such later time and/or date as the Company and Numis may decide, the Application Form will be sent to each Qualifying CREST Shareholder in substitution for the Open Offer Entitlement and Excess CREST Open Offer Entitlement which should have been credited to his stock account in CREST. In these circumstances the expected timetable as set out in this document will be adjusted as appropriate and the provisions of this document applicable to Qualifying Non-CREST Shareholders with Application Forms will apply to Qualifying CREST Shareholders who receive such Application Forms.

CREST members who wish to apply to acquire some or all of their entitlements to Open Offer Shares and Excess CREST Open Offer Entitlements should refer to the CREST Manual for further information on the CREST procedures referred to below. Should you need advice with regard to these procedures, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal or tax advice. If you are a CREST sponsored member you should consult your CREST sponsor if you wish to apply for Open Offer Shares as only your CREST sponsor will be able to take the necessary action to make this application in CREST.

4.2.2bona fide Market claims

Each of the Open Offer Entitlements and the Excess CREST Open Offer Entitlements will constitute a separate security for the purposes of CREST. Although Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of Open Offer Entitlements and Excess CREST Open Offer Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim transaction. Transactions identified by the CREST Claims Processing Unit as "cum" the Open Offer Entitlement and the Excess CREST Open Offer Entitlement will generate an appropriate market claim transaction and the relevant Open Offer Entitlement(s) and Excess CREST Open Offer Entitlement(s) will thereafter be transferred accordingly.

4.2.3 Excess Application Facility

Provided Qualifying CREST Shareholders choose to take up their Open Offer Entitlement in full, the Excess Application Facility enables Qualifying CREST Shareholders to apply for Open Offer Shares in excess of their Open Offer Entitlement.

There is no limit on the amount of New Shares that can be applied for under the Excess Application Facility, save that the maximum amount of New Shares to be allotted under the Excess Application Facility will be limited by the maximum size of the Capital Raising less the aggregate of the Firm Placed Shares, the New Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any New Shares that the Directors determine to issue under the Placing and/or the Offer for Subscription save to the extent that the Directors exercise their discretion to increase the size of the Capital Raising and allocate part of that increase to the Excess Application Facility. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and the extent that the Directors increase the size of the Capital Raising and allocate further new Shares to the Excess Application Facility. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will returned to the Applicant (at the Applicant's risk) without interest as soon as practicable thereafter by way of cheque.

An Excess CREST Open Offer Entitlement may not be sold or otherwise transferred. Subject as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, the CREST accounts of Qualifying CREST Shareholders will be credited with an Excess CREST Open Offer Entitlement in order for any applications for Excess Shares to be settled through CREST. The credit of such Excess CREST Open Offer Entitlement does not in any way give Qualifying CREST Shareholders a right to the Open Offer Shares attributable to the Excess CREST Open Offer Entitlement as an Excess CREST Open Offer Entitlement is subject to scaling back in accordance with the terms of this document.

To apply for Excess Shares pursuant to the Open Offer, Qualifying CREST Shareholders should follow the instructions above and must not return a paper form and cheque.

Should a transaction be identified by the CREST Claims Processing Unit as "cum" the Open Offer Entitlement and the relevant Open Offer Entitlement(s) be transferred, the Excess CREST Open Offer Entitlement(s) will not transfer with the Open Offer Entitlement(s) claim, but will be transferred as a separate claim. Should a Qualifying CREST Shareholder cease to hold all of his or her Existing Shares as a result or one or more bona fide market claims, the Excess CREST Open Offer Entitlement credited to CREST, and allocated to the relevant Qualifying Shareholder, will be transferred to the purchaser. Please note that an additional USE Instruction must be sent in respect of any application under the Excess CREST Open Offer Entitlement.

Qualifying CREST Shareholder who has made a valid application for Excess Shares under the Excess Application Facility which is not met in fully, and from whom payment in full for Excess Shares has been received, will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to, the relevant Qualifying CREST Shareholder, multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

Fractions of Excess Shares will not be issued under the Excess Application Facility and fractions of Excess Shares will be round down to the nearest whole number.

4.2.4 USE instructions

Qualifying CREST Shareholders who are CREST members and who want to apply for Open Offer Shares in respect of all or some of their Open Offer Entitlement in CREST must send (or, if they are CREST sponsored members, procure that their CREST sponsor sends) an Unmatched Stock Event ("USE") instruction ("USE Instruction") to Euroclear which, on its settlement, will have the following effect:

• (a) the crediting of a stock account of the Registrar under the participant ID and member account ID specified below, with a number of Open Offer Entitlements corresponding to the number of Open Offer Shares applied for; and
• (b) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Registrar in respect of the amount specified in the USE Instruction which must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.4(a) above.

4.2.5 Content of USE instruction in respect of Open Offer Entitlements

The USE Instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

• (a) the number of Open Offer Shares for which application is being made (and hence the number of the Open Offer Entitlement(s) being delivered to the Registrar);
• (b) the ISIN of the Open Offer Entitlement. This is GB000BJ3VWJ50;
• (c) the CREST participant ID of the accepting CREST member;
• (d) the CREST member account ID of the accepting CREST member from which the Open Offer Entitlements are to be debited;
• (e) the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
• (f) the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 28170IPG;
• (g) the amount payable by means of a CREST payment on settlement of the USE Instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.4(a) above;
• (h) the intended settlement date. This must be on or before 11.00 a.m. on 11 February 2014; and
• (i) the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.

In order for an application under the Open Offer to be valid, the USE Instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 10 February 2014.

In order to assist prompt settlement of the USE Instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE Instruction:

• (i) a contact name and telephone number (in the free format shared note field); and
• (ii) a priority of at least 80.

CREST members and, in the case of CREST sponsored members, their CREST sponsors, should note that the last time at which a USE Instruction may settle on 10 February 2014 in order to be valid is 11.00 a.m. on that day.

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 14 February 2014 or such later time and date as the Company and Numis determine (being no later than 8.00 a.m. on 28 February 2014), the Capital Raising will lapse, the Open Offer Entitlements admitted to CREST will be disabled and the Registrar will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies (if any) will be retained for the benefit of the Company.

4.2.6 USE Instructions

Qualifying CREST Shareholders who are CREST members and who want to apply for Excess Shares in respect of all or some of their Excess CREST Open Offer Entitlement in CREST must send (or, if they are CREST sponsored members, procure that their CREST sponsor sends) a USE instruction to Euroclear which, on its settlement, will have the following effect:

• (a) the crediting of a stock account of the Registrar under the participant ID and member account ID specified below, with a number of Excess CREST Open Offer Entitlements corresponding to the number of Excess Shares applied for; and
• (b) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Registrar in respect of the amount specified in the USE Instruction which must be the full amount payable on application for the number of Excess Shares referred to in paragraph 4.2.10(a) above.

4.2.7 Content of USE instruction in respect of Excess CREST Open Offer Entitlements

The USE Instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

• (a) the number of Excess Shares for which application is being made (and hence the number of the Excess CREST Open Offer Entitlement(s) being delivered to the Registrar);
• (b) the ISIN of the Excess CREST Open Offer Entitlement. This is GB00BJ3VWM89;
• (c) the CREST participant ID of the accepting CREST member;
• (d) the CREST member account ID of the accepting CREST member from which the Excess CREST Open Offer Entitlements are to be debited;
• (e) the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
• (f) the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 28170IPG;
• (g) the amount payable by means of a CREST payment on settlement of the USE Instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.10(a) above;
• (h) the intended settlement date. This must be on or before 11.00 a.m. on 11 February 2014; and
• (i) the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.

In order for an application under the Open Offer to be valid, the USE Instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 11 February 2014.

In order to assist prompt settlement of the USE Instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE Instruction:

• (i) a contact name and telephone number (in the free format shared note field); and
• (ii) a priority of at least 80.

CREST members and, in the case of CREST sponsored members, their CREST sponsors, should note that the last time at which a USE Instruction may settle on 11 February 2014 in order to be valid is 11.00 a.m. on that day.

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 14 February 2014 or such later time and date as the Company and Numis determine (being no later than 8.00 a.m. on 28 February 2014), the Capital Raising will lapse, the Excess CREST Open Offer Entitlements admitted to CREST will be disabled and the Registrar will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies (if any) will be retained for the benefit of the Company.

4.2.8 Deposit of Open Offer Entitlements and Excess CREST Open Offer Entitlements into, and withdrawal from, CREST

A Qualifying Non-CREST Shareholder's entitlement under the Open Offer, as shown by the number of Open Offer Entitlements set out in his Application Form in Box 4, including the entitlement to apply under the Excess Application Facility may be deposited into CREST (either into the account of the Qualifying Shareholder named in the Application Form or into the name of a person entitled by virtue of a bona fide market claim). Similarly, Open Offer Entitlements and Excess CREST Open Offer Entitlements held in CREST may be withdrawn from CREST so that the entitlement under the Open Offer and entitlements to apply under Excess Application Facility is reflected in an Application Form. Normal CREST procedures (including timings) apply in relation to any such deposit or withdrawal, subject (in the case of a deposit into CREST) as set out in the Application Form.

A holder of an Application Form who is proposing to deposit the entitlement set out in such form into CREST (in accordance with the instructions contained in the Application Form) is recommended to ensure that the deposit procedures are implemented in sufficient time to enable the person holding or acquiring the Open Offer Entitlements and the entitlement to apply under the Excess Application Facility following their deposit into CREST to take all necessary steps in connection with taking up the entitlement prior to 11.00 a.m. on 11 February 2014. After depositing their Open Offer Entitlement into their CREST account, CREST holders will shortly thereafter receive a credit for their Excess CREST Open Offer Entitlement, which will be managed by the Registrar. CREST holders inputting the withdrawal of their Open Offer Entitlement from their CREST account must ensure that they withdraw both their Open Offer Entitlement and their Excess CREST Open Offer Entitlement.

In particular, having regard to normal processing times in CREST and on the part of the Receiving Agent, the recommended latest time for depositing an Application Form with the CREST Courier and Sorting Service, where the person entitled wishes to hold the entitlement under the Open Offer set out in such Application Form as an Open Offer Entitlement and an Excess CREST Open Offer Entitlement in CREST, is 3.00 p.m. on 6 February 2014 and the recommended latest time for receipt by Euroclear of a dematerialised instruction requesting withdrawal of an Open Offer Entitlement or an Excess CREST Open Offer Entitlement from CREST is 4.30 p.m. on 5 February 2014 in either case so as to enable the person acquiring or (as appropriate) holding the Open Offer Entitlement and the entitlement to apply under the Excess Application Facility or an Excess CREST Open Offer Entitlement following the deposit or withdrawal (whether as shown in an Application Form or held in CREST) to take all necessary steps in connection with applying in respect of the Open Offer Entitlements and under the Excess Application Facility or in respect of the Excess CREST Open Offer Entitlement, as the case may be, prior to 11.00 a.m. on 11 February 2014.

Delivery of an Application Form with the CREST deposit form duly completed whether in respect of a deposit into the account of the Qualifying Shareholder named in the Application Form or into the name of another person, shall constitute a representation and warranty to the Company and the Receiving Agent by the relevant CREST member(s) that it/they is/are not in breach of the provisions of the notes under the paragraph headed "Instructions for depositing entitlements under the Open Offer into CREST" on page 3 of the Application Form, and a declaration to the Company and the Registrar from the relevant CREST member(s) that it/they is/are not citizen(s) or resident(s) of the US, any Excluded Territory or any other jurisdiction in which the application for Open Offer Shares is prevented by law and, where such deposit is made by a beneficiary of a market claim, a representation and warranty that the relevant CREST member(s) is/are entitled to apply under the Open Offer by virtue of a bona fide market claim.

4.2.9 Validity of application

A USE Instruction complying with the requirements as to authentication and contents set out above which settles by no later than 11.00 a.m. on 11 February 2014 will constitute a valid application under the Open Offer.

4.2.10 CREST procedures and timings

CREST members and (where applicable) their CREST sponsors should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in relation to the input of a USE Instruction and its settlement in connection with the Open Offer. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST sponsored member, to procure that his CREST sponsor takes) such action as shall be necessary to ensure that a valid application is made as stated above by 11.00 a.m. on 10 February 2014. In this connection CREST members and (where applicable) their CREST sponsors are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

4.2.11 Incorrect or incomplete applications

If a USE Instruction includes a CREST payment for an incorrect sum, the Company, through the Registrar, reserves the right:

• (a) to reject the application in full and refund the payment to the CREST member in question (without interest);
• (b) in the case that an insufficient sum is paid, to treat the application as a valid application for such lesser whole number of Open Offer Shares as would be able to be applied for with that payment at the Issue Price, refunding any unutilised sum to the CREST member in question (without interest); and
• (c) in the case that an excess sum is paid, to treat the application as a valid application for all the Open Offer Shares referred to in the USE Instruction, refunding any unutilised sum to the CREST member in question (without interest).

4.2.12 Effect of valid application

A CREST member or CREST sponsored member who makes or is treated as making a valid application in accordance with the above procedures thereby:

(a) represents and warrants to the Company and Numis that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights, and perform his obligations, under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;

• (b) agrees to pay the amount payable on application in accordance with the above procedures by means of a CREST payment in accordance with the CREST payment arrangements (it being acknowledged that the payment to the Registrar's payment bank in accordance with the CREST payment arrangements shall, to the extent of the payment, discharge in full the obligation of the CREST member to pay to the Company the amount payable on application);
• (c) agrees with the Company and Numis that all applications and any contracts or non contractual obligations resulting therefrom under the Open Offer shall be governed by, and construed in accordance with, the laws of England;
• (d) confirms to the Company and Numis that in making the application he is not relying on any information or representation in relation to the Group other than that contained in (or incorporated by reference in) this document, and the applicant accordingly agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all the information in relation to the Group contained in this document (including information incorporated by reference);
• (e) confirms to the Company and Numis that no person has been authorised to give any information or to make any representation concerning the Company or the New Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be, and has not been, relied upon as having been authorised by the Company or Numis;
• (f) represents and warrants to the Company and Numis that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlements and Excess CREST Open Offer Entitlements or that he has received such Open Offer Entitlement and Excess CREST Open Offer Entitlement by virtue of a bona fide market claim;
• (g) represents and warrants to the Company and Numis that if he has received some or all of his Open Offer Entitlement and Excess CREST Open Offer Entitlement from a person other than the Company, he is entitled to apply under the Open Offer in relation to such Open Offer Entitlement and Excess CREST Open Offer Entitlement by virtue of a bona fide market claim;
• (h) requests that the Open Offer Shares to which he will become entitled be issued to him on the terms set out in this document, subject to the Articles;
• (i) represents and warrants to the Company and Numis that he is not, nor is he applying on behalf of any person who is, in the United States or is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the US or any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law and he is not applying with a view to re-offering, reselling, transferring or delivering any of the Open Offer Shares which are the subject of his application in the United States or to, or for the benefit of, a person who is a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law (except where proof satisfactory to the Company has been provided to the Company that he is able to accept the invitation by the Company free of any requirement which it (in its absolute discretion) regards as

unduly burdensome), nor acting on behalf of any such person on a non-discretionary basis nor (a) person(s) otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares under the Open Offer;

• (j) represents and warrants to the Company and Numis that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986; and
• (k) confirms to the Company and Numis that in making the application he is not relying and has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or his investment decision.

4.2.13 Company's discretion as to the rejection and validity of applications

The Company may in its sole discretion but with the prior consent of Numis:

• (a) treat as valid (and binding on the CREST member concerned) an application which does not comply in all respects with the requirements as to validity set out or referred to in this Part III;
• (b) accept an alternative properly authenticated dematerialised instruction from a CREST member or (where applicable) a CREST sponsor as constituting a valid application in substitution for or in addition to a USE Instruction and subject to such further terms and conditions as the Company may determine;
• (c) treat a properly authenticated dematerialised instruction (in this paragraph the "first instruction") as not constituting a valid application if, at the time at which the Registrar receives a properly authenticated dematerialised instruction giving details of the first instruction or thereafter, either the Company or the Registrar has received actual notice from Euroclear of any of the matters specified in Regulation 35(5)(a) of the CREST Regulations in relation to the first instruction. These matters include notice that any information contained in the first instruction was incorrect or notice of lack of authority to send the first instruction; and
• (d) accept an alternative instruction or notification from a CREST member or CREST sponsored member or (where applicable) a CREST sponsor, or extend the time for settlement of a USE Instruction or any alternative instruction or notification, in the event that, for reasons or due to circumstances outside the control of any CREST member or CREST sponsored member or (where applicable) CREST sponsor, the CREST member or CREST sponsored member is unable validly to apply for Open Offer Shares by means of the above procedures. In normal circumstances, this discretion is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST) or on the part of the facilities and/or systems operated by the Registrar in connection with CREST.

4.2.14 Lapse of the Open Offer

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 14 February 2014 or such later time and date as the Company and Numis may agree, the Capital Raising will lapse, the Open Offer Entitlements and Excess CREST Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies, if any, will be retained for the benefit of the Company.

5. MONEY LAUNDERING REGULATIONS

5.1 Holders of Application Forms

To ensure compliance with the Money Laundering Regulations, the Receiving Agent may require, at its absolute discretion, verification of the identity of the person by whom or on whose behalf the Application Form is lodged with payment (which requirements are referred to below as the "verification of identity requirements"). If the Application Form is submitted by a UK regulated broker or intermediary acting as agent and which is itself subject to the Money Laundering Regulations, any verification of identity requirements are the responsibility of such broker or intermediary and not of the Registrar. In such case, the lodging agent's stamp should be inserted on the Application Form.

The person lodging the Application Form with payment and in accordance with the other terms as described above (the "acceptor"), including any person who appears to the Receiving Agent to be acting on behalf of some other person, accepts the Open Offer in respect of such number of Open Offer Shares as is referred to therein (for the purposes of this paragraph 5.1 the "relevant Open Offer Shares") shall thereby be deemed to agree to provide the Registrar with such information and other evidence as the Receiving Agent may require to satisfy the verification of identity requirements.

If the Registrar determines that the verification of identity requirements apply to any acceptor or application, the relevant Open Offer Shares (notwithstanding any other term of the Open Offer) will not be issued to the relevant acceptor unless and until the verification of identity requirements have been satisfied in respect of that acceptor or application. The Receiving Agent is entitled, in its absolute discretion, to determine whether the verification of identity requirements apply to any acceptor or application and whether such requirements have been satisfied, and neither the Receiving Agent nor the Company will be liable to any person for any loss or damage suffered or incurred (or alleged), directly or indirectly, as a result of the exercise of such discretion.

If the verification of identity requirements apply, failure to provide the necessary evidence of identity within a reasonable time may result in delays in the despatch of share certificates or in crediting CREST accounts. If, within a reasonable time following a request for verification of identity, the Receiving Agent has not received evidence satisfactory to it as aforesaid, the Company may, in its absolute discretion, treat the relevant application as invalid, in which event the monies payable on acceptance of the Open Offer will be returned (at the acceptor's risk) without interest to the account of the bank or building society on which the relevant cheque or banker's draft was drawn. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory advice.

Submission of an Application Form with the appropriate remittance will constitute a warranty to each of the Company, the Receiving Agent and Numis from the applicant that the Money Laundering Regulations will not be breached by application of such remittance.

The verification of identity requirements will not usually apply:

• (a) if the applicant is an organisation required to comply with the Money Laundering Directive (2005/60/EC of the European Parliament and of the EC Council of 26 October on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing); or
• (b) if the acceptor is a regulated United Kingdom broker or intermediary acting as agent and is itself subject to the Money Laundering Regulations; or
• (c) if the applicant (not being an applicant who delivers his application in person) makes payment by way of a cheque drawn on an account in the applicant's name; or
• (d) if the aggregate subscription price for the Open Offer Shares is less than €15,000 (approximately £12,300).

In other cases the verification of identity requirements may apply. Satisfaction of these requirements may be facilitated in the following ways:

• (i) if payment is made by cheque or banker's draft in sterling drawn on a branch in the United Kingdom of a bank or building society which bears a UK bank sort code number in the top right hand corner the following applies. Cheques, should be made payable to "Capita Registrars Limited re: IP Group plc Open Offer" in respect of an application by a Qualifying Shareholder and crossed "A/C Payee Only". Cheques should be drawn on the personal account of the individual investor to which they have sole or joint title to the funds. Third party cheques may not be accepted with the exception of building society cheques or bankers' drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the cheque/bankers' draft to such effect. However, third party cheques will be subject to the Money Laundering Regulations which would delay Shareholders receiving their Open Offer Shares. The account name should be the same as that shown on the Application Form; or
• (ii) if the Application Form is lodged with payment by an agent which is an organisation of the kind referred to in (a) above or which is subject to anti-money laundering regulation in a country which is a member of the Financial Action Task Force (the non-European Union members of which are Argentina, Australia, Brazil, Canada, China, Gibraltar, Hong Kong, Iceland, Japan, Mexico, New Zealand, Norway, Russian Federation, Singapore, South Africa, Switzerland, Turkey, UK Crown Dependencies and the US and, by virtue of their membership of the Gulf Cooperation Council, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), the agent should provide with the Application Form written confirmation that it has that status and a written assurance that it has obtained and recorded evidence of the identity of the person for whom it acts and that it will on demand make such evidence available to the Registrar. If the agent is not such an organisation, it should contact Capita Registrars on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK.

To confirm the acceptability of any written assurance referred to in (b) above, or in any other case, the acceptors should contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Placing and/or Open Offer nor give any financial, legal or tax advice.

If the Application Form is in respect of Open Offer Shares with an aggregate subscription price of €15,000 (approximately £12,300) or more and is/are lodged by hand by the acceptor in person, or if the Application Form in respect of Open Offer Shares is/are lodged by hand by the acceptor and the accompanying payment is not the acceptor's own cheque, he or she should ensure that he or she has with him or her evidence of identity bearing his or her photograph (for example, his or her passport) and separate evidence of his or her address.

If, within a reasonable period of time following a request for verification of identity, and in any case by no later than 11.00 a.m. on 14 February 2014, the Receiving Agent has not received evidence satisfactory to it as aforesaid, the Receiving Agent may, at its discretion, as agent of the Company, reject the relevant application, in which event the monies submitted in respect of that application will be returned without interest to the account at the drawee bank from which such monies were originally debited (without prejudice to the rights of the Company to undertake proceedings to recover monies in respect of the loss suffered by it as a result of the failure to produce satisfactory evidence as aforesaid).

5.2 Open Offer Entitlements in CREST

If you hold your Open Offer Entitlements in CREST and apply for Open Offer Shares in respect of all or some of your Open Offer Entitlements as agent for one or more persons and you are not a UK or EU regulated person or institution (e.g. a UK financial institution), then, irrespective of the value of the application, the Receiving Agent is obliged to take reasonable measures to establish the identity of the person or persons on whose behalf you are making the application. You must therefore contact the Registrar before sending any USE Instruction or other instruction so that appropriate measures may be taken.

Submission of a USE Instruction which on its settlement constitutes a valid application as described above constitutes a warranty and undertaking by the applicant to provide promptly to the Registrar such information as may be specified by the Registrar as being required for the purposes of the Money Laundering Regulations. Pending the provision of evidence satisfactory to the Registrar as to identity, the Registrar may in its absolute discretion take, or omit to take, such action as it may determine to prevent or delay issue of the Open Offer Shares concerned. If satisfactory evidence of identity has not been provided within a reasonable time, then the application for the Open Offer Shares represented by the USE Instruction will not be valid. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory evidence.

6. OVERSEAS SHAREHOLDERS

This document has been approved by the FCA, being the competent authority in the United Kingdom.

Accordingly, the making of the Open Offer to persons resident in, or who are citizens of, or who have a registered address in, countries other than the United Kingdom may be affected by the law or regulatory requirements of the relevant jurisdiction. The comments set out in this paragraph 6 are intended as a general guide only and any Overseas Shareholders who are in any doubt as to their position should consult their professional advisers without delay.

6.1 General

The distribution of this document and the Application Form and the making of the Open Offer to persons who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, or which are corporations, partnerships or other entities created or organised under the laws of countries other than the United Kingdom or to persons who are nominees of or custodians, trustees or guardians for citizens, residents in or nationals of, countries other than the United Kingdom may be affected by the laws or regulatory requirements of the relevant jurisdictions. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any applicable legal requirement or other formalities to enable them to apply for Open Offer Shares under the Open Offer.

No action has been or will be taken by the Company, Numis or any other person to permit a public offering or distribution of this document (or any other offering or publicity materials or application form(s) relating to the Open Offer Shares) in any jurisdiction where action for that purpose may be required, other than in the United Kingdom.

Receipt of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST will not constitute an invitation or offer of securities for subscription, sale or purchase in those jurisdictions in which it would be illegal to make such an invitation or offer and, in those circumstances, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

Application Forms will not be sent to, and Open Offer Entitlements and Excess Open Offer Entitlements will not be credited to stock accounts in CREST of, persons with registered addresses in the United States or an Excluded Territory or their agent or intermediary, except where the Company is satisfied that such action would not result in the contravention of any registration or other legal requirement in any jurisdiction.

No person receiving a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements and Excess Open Offer Entitlements to a stock account in CREST in any territory other than the United Kingdom may treat the same as constituting an invitation or offer to him or her, nor should he or she in any event use any such Application Form and/or credit of Open Offer Entitlements to a stock account in CREST unless, in the relevant territory, such an invitation or offer could lawfully be made to him or her and such Application Form and/or credit of Open Offer Entitlements to a stock account in CREST could lawfully be used, and any transaction resulting from such use could be effected, without contravention of any registration or other legal or regulatory requirements. In circumstances where an invitation or offer would contravene any registration or other legal or regulatory requirements, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

It is the responsibility of any person (including, without limitation, custodians, agents, nominees and trustees) outside the United Kingdom wishing to apply for Open Offer Shares under the Open Offer to satisfy himself or herself as to the full observance of the laws of any relevant territory in connection therewith, including obtaining any governmental or other consents that may be required, observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes due in such territory.

Neither the Company, Numis, nor any of their respective directors, employees or representatives, is making any representation to any offeree or purchaser of the New Shares regarding the legality of an investment in the New Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser.

Persons (including, without limitation, custodians, agents, nominees and trustees) receiving a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST, in connection with the Open Offer or otherwise, should not distribute or send either of those documents nor transfer Open Offer Entitlements in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST is received by any person in any such territory, or by his or her custodian, agent, nominee or trustee, he or she must not seek to apply for Open Offer Shares in respect of the Open Offer unless the Company and Numis determine that such action would not violate applicable legal or regulatory requirements. Any person (including, without limitation, custodians, agents, nominees and trustees) who does forward a copy of this document and/or an Application Form and/or transfers Open Offer Entitlements into any such territory, whether pursuant to a contractual or legal obligation or otherwise, should draw the attention of the recipient to the contents of this Appendix 2 and specifically the contents of this paragraph 6.

Subject to paragraphs 6.2 to 6.6 below, any person (including, without limitation, custodians, agents, nominees and trustees) outside the United Kingdom wishing to apply for Open Offer Shares in respect of the Open Offer must satisfy himself or herself as to the full observance of the applicable laws of any relevant territory, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories.

The Company reserves the right to treat as invalid any application or purported application for Open Offer Shares that appears to the Company or its agents to have been executed, effected or dispatched from the United States or an Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Open Offer Shares or in the case of a credit of Open Offer Entitlements to a stock account in CREST, to a CREST member whose registered address would be, in the United States or an Excluded Territory or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates or make such a credit.

The attention of Overseas Shareholders is drawn to paragraphs 6.2 to 6.6 below.

Notwithstanding any other provision of this document or the Application Form, the Company reserves the right to permit any person to apply for Open Offer Shares in respect of the Open Offer if the Company, in its sole and absolute discretion, is satisfied that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

Overseas Shareholders who wish, and are permitted, to apply for Open Offer Shares should note that payment must be made in sterling denominated cheques or bankers' drafts or where such Overseas Shareholder is a Qualifying CREST Shareholder, through CREST.

Due to restrictions under the securities laws of the United States and the Excluded Territories, and subject to certain exceptions, Qualifying Shareholders in the United States or who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, the US or any Excluded Territory will not qualify to participate in the Open Offer and will not be sent an Application Form nor will their stock accounts in CREST be credited with Open Offer Entitlements.

The Open Offer Shares have not been and will not be registered under the relevant laws of the United States or any Excluded Territory or any state, province or territory thereof and may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, in or into the United States or any Excluded Territory or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, the US or any Excluded Territory except pursuant to an applicable exemption.

No public offer of Open Offer Shares is being made by virtue of this document or the Application Forms into the United States or any Excluded Territory. Receipt of this document and/or an Application Form and/or a credit of an Open Offer Entitlement to a stock account in CREST will not constitute an invitation or offer of securities for subscription, sale or purchase in those jurisdictions in which it would be illegal to make such an invitation or offer and, in those circumstances, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

6.2 United States

The Company is not and does not intend to become an "investment company'' within the meaning of the US Investment Company Act, and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered in the United States as an investment company under the US Investment Company Act. The US Investment Company Act provides certain protections to investors and imposes certain restrictions on companies that are registered as investment companies. As the Company is not so registered and does not plan to be so registered, none of these protections or restrictions is or will be applicable to the Company. Restrictions on the ownership and transfer of the New Shares may materially affect certain Shareholders' ability to transfer the New Shares.

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States. Publicly available information about the issuers of securities listed on the London Stock Exchange differs from and, in certain respects, is less detailed than the information that is regularly published by or about listed companies in the United States. In addition, regulations governing the London Stock Exchange may not be as extensive in all respects as those in effect on United States markets.

Financial Statements prepared under IFRS differ from those prepared under US GAAP in a number of respects including, but not limited to, revenue recognition, share option compensation, accounting for business combinations and acquisitions of intellectual property and accounting for capital instruments. Potential investors are advised to consult their own professional advisers as to the significance of these differences. In making an investment decision, investors must rely upon their own examination of the Company, the terms of the offering and the financial information. Potential investors should consult their own professional advisers for an understanding of the differences between IFRS and US GAAP, and how those differences might affect the financial information herein. The New Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the United States, except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer in the United States.

The New Shares are being offered or sold only: (a) outside the United States in offshore transactions within the meaning of, and in accordance with, the safeharbour from the registration requirements provided by Regulation S; and (b) within, into or in the United States to persons reasonably believed to be both QIBs and Qualified Purchasers solely in private placement transactions not involving any public offering in reliance on the exemption from the registration requirements of Section 5 of the US Securities Act provided by Section 4(a)(2) under the US Securities Act or another applicable exemption therefrom.

Accordingly, the Company is not extending the Open Offer into the US unless an exemption from the registration requirements of the US Securities Act is available and, subject to certain exceptions, neither this document nor the Application Form constitutes or will constitute an offer or an invitation to apply for or an offer or an invitation to acquire any New Shares in the US. Subject to certain exceptions, neither this document nor an Application Form will be sent to, and no New Shares will be credited to a stock account in CREST of, any Qualifying Shareholder with a registered address in the US. Subject to certain exceptions, Application Forms sent from or post-marked in the US will be deemed to be invalid and all persons acquiring New Shares and wishing to hold such New Shares in registered form must provide an address for registration of the New Shares issued upon exercise thereof outside the US.

Subject to certain exceptions, any person who acquires New Shares will be deemed to have declared, warranted and agreed, by accepting delivery of this document or the Application Form and delivery of the New Shares, that they are not, and that at the time of acquiring the New Shares they will not be, in the US or acting on behalf of, or for the account or benefit of a person on a non-discretionary basis in the US or any state of the US.

The Company and Numis reserve the right to treat as invalid any Application Form that appears to the Company and Numis or their respective agents to have been executed in, or despatched from, the US, or that provides an address in the US for the receipt of New Shares, or which does not make the warranty set out in the Application Form to the effect that the person accepting the Application Form does not have a registered address and is not otherwise located in the US and is not acquiring the New Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such New Shares in the US or where the Company believes acceptance of such Application Form may infringe applicable legal or regulatory requirements. The Company will not be bound to allot (on a non-provisional basis) or issue any New Shares to any person with an address in, or who is otherwise located in, the US in whose favour a Application Form or any New Shares may be transferred. In addition, the Company, and/or Numis reserve the right to reject any USE instruction sent by or on behalf of any CREST member with a registered address in the US in respect of the New Shares.

Notwithstanding the foregoing, New Shares may be offered to and acquired by Shareholders in the United States pursuant to an available exemption from registration under the US Securities Act. Any Shareholder to whom New Shares are offered and by whom New Shares are acquired will be required to, among other things, warrant, undertake or acknowledge certain information and/or obligations, as the case may be, in order to participate in the transaction. Such warranties will include, among others, warranties as to the fact that: (a) a QIB and a Qualified Purchaser; (b) acquiring the New Shares for its own account or for the account of a QIB and a Qualified Purchaser; (c) the Shareholder did not become aware of nor were the New Shares offered to the Shareholder by any form of any "general solicitation" or "general advertising" (as such terms are defined in Regulation D); (d) the Shareholder is acquiring the New Shares as principal for its own account and not with a view to or for distributing or reselling such New Shares or any portion thereof, without prejudice, however, to its right at all times to sell or otherwise dispose of all or any part of such New Shares in compliance with applicable United States federal and state securities laws; and (e) the New Shares were offered to the Shareholder solely by means of the Prospectus and by direct contact between the investor and the Company.

Each Shareholder acknowledges that the New Shares are "restricted securities" within the meaning Rule 144(a)(3) of the US Securities Act and it represents that it will not resell the New Shares absent registration or an available exemption or safe harbour from registration under the US Securities Act. Resales of New Shares may only be made (i) outside the US in offshore transactions in reliance on Regulation S or (ii) within the US to investors that are both QIBs and Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer New Shares to investors that do not meet the foregoing requirements.

In addition, until 40 days after the commencement of the Open Offer, an offer, sale or transfer of the New Shares within the US by a dealer (whether or not participating in the Placing and Open Offer) may violate the registration requirements of the US Securities Act.

6.3 Excluded Territories

Due to restrictions under the securities laws of the Excluded Territories and subject to certain exemptions, Shareholders who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, any Excluded Territories will not qualify to participate in the Open Offer and will not be sent an Application Form nor will their stock accounts in CREST be credited with any Open Offer Entitlement or any Excess CREST Open Offer Entitlement.

The Open Offer Shares have not been and will not be registered under the relevant laws of any Excluded Territory or any state, province or territory thereof and may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into any Excluded Territory or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, any Excluded Territory except pursuant to an applicable exemption.

No offer of Open Offer Shares is being made by virtue of this document or the Application Forms into any Excluded Territory.

6.4 Other overseas territories

Application Forms will be sent to Qualifying Non-CREST Shareholders and Open Offer Entitlements and Excess CREST Open Offer Entitlements will be credited to the stock account in CREST of Qualifying CREST Shareholders. Qualifying Shareholders in jurisdictions other than the United States or the Excluded Territories may, subject to the laws of their relevant jurisdiction, take up Open Offer Shares under the Open Offer in accordance with the instructions set out in this document and the Application Form.

Qualifying Shareholders who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, countries other than the United Kingdom should consult appropriate professional advisers as to whether they require any governmental or other consents or need to observe any further formalities to enable them to apply for any New Shares in respect of the Open Offer.

Each person to whom the New Shares or the Application Forms are distributed, offered or sold outside the US will be deemed by its subscription for, or purchase of, the New Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the New Shares, as the case may be, that:

6.4.1 it is acquiring the New Shares from the Company or Numis in an "offshore transaction" as defined in Regulation S; and

6.4.2 the New Shares have not been offered to it by the Company or Numis by means of any "directed selling efforts" as defined in Regulation S.

6.5 Representations and warranties relating to Overseas Shareholders

6.5.1 Qualifying Non-CREST Shareholders

Any person completing and returning an Application Form or requesting registration of the Open Offer Shares comprised therein represents and warrants to the Company, Numis and the Receiving Agent that, except where proof has been provided to the Company's satisfaction (in its absolute discretion) that such person's completion of an Application Form or request for registration of the Open Offer Shares comprised therein will not result in the contravention of any applicable legal requirements in any jurisdiction: (i) such person is not requesting registration of the relevant Open Offer Shares from within the United States or any Excluded Territory; (ii) such person is not in any territory in which it is unlawful to make or accept an offer to acquire Open Offer Shares in respect of the Open Offer or to use the Application Form in any manner in which such person has used or will use it; (iii) such person is not acting on a non discretionary basis for a person located within the United States, any Excluded Territory (or any territory referred to in (ii) above at the time the instruction to accept was given; and (iv) such person is not acquiring Open Offer Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Open Offer Shares into any of the above territories. The Company, Numis and/or the Receiving Agent in consultation with Numis may treat as invalid any acceptance or purported acceptance of the allotment of Open Offer Shares comprised in an Application Form if it: (i) appears to the Company and/or Numis or their respective agents to have been executed, effected or dispatched from the United States or an Excluded Territory or in a manner that may involve breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements; or (ii) provides an address in the United States or an Excluded Territory for delivery of the share certificates of Open Offer Shares (or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates); or (iii) purports to exclude the representation and warranty required by this paragraph 6.5.

6.5.2 Qualifying CREST Shareholders

A CREST member or CREST sponsored member who makes a valid acceptance in accordance with the procedures set out in this Part III represents and warrants to the Company, Numis and the Receiving Agent that, except where proof has been provided to the Company's satisfaction (in its absolute discretion) that such person's acceptance will not result in the contravention of any applicable legal requirement in any jurisdiction: (i) neither it nor its client is within the United States or any Excluded Territory; (ii) neither it nor its client is in any territory in which it is unlawful to make or accept an offer to acquire Open Offer Shares; (iii) it is not accepting on a non-discretionary basis for a person located within any Excluded Territory (except as otherwise agreed with the Company) or any territory referred to in (ii) above at the time the instruction to accept was given; and (iv) neither it nor its client is acquiring any Open Offer Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Open Offer Shares into any of the above territories.

6.6 Waiver

The provisions of this paragraph 6 and of any other terms of the Open Offer relating to Overseas Shareholders may be waived, varied or modified as regards specific persons or on a general basis by the Company and Numis in their absolute discretion. Subject to this, the provisions of this paragraph 6 supersede any terms of the Open Offer inconsistent herewith. References in this paragraph 6 to the Shareholders shall include references to the person or persons executing an Application Form and, in the event of more than one person executing an Application Form, the provisions of this paragraph 6 shall apply to them jointly and to each of them.

7. WITHDRAWAL RIGHTS

Persons wishing to exercise or direct the exercise of statutory withdrawal rights pursuant to section 87Q(4) of the FSMA after the issue by the Company of a prospectus supplementing this document must do so by despatching a written notice of withdrawal within two Business Days commencing on the Business Day after the date on which the supplementary prospectus is published. The withdrawal notice must include the full name and address of the person wishing to exercise statutory withdrawal rights and, if such person is a CREST member, the participant ID and the member account ID of such CREST member. The notice of withdrawal must be either deposited by hand (during normal business hours only) or by post with the Registrar at Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by email to withdraw@capitaregistrars.com so as to be received before the end of the withdrawal period. Notice of withdrawal given by any other means or which is deposited with the Registrar after the expiry of such period will not constitute a valid withdrawal, provided that the Company will not permit the exercise of withdrawal rights after payment by the relevant person for the Open Offer Shares applied for in full and the allotment of such Open Offer Shares to such person becoming unconditional save to the extent required by statute. In such event, Shareholders are advised to seek independent legal advice.

If you have any queries please call Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Placing and Open Offer nor give any financial, legal or tax advice.

8. CAPITAL RAISING ADMISSION, SETTLEMENT AND DEALINGS

The result of the Open Offer is expected to be announced on 12 February 2014. Applications will be made to the UKLA for the Capital Raising Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Capital Raising Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Capital Raising Admission will become effective, and that dealings in the Capital Raising Shares, fully paid, will commence at 8.00 a.m. on 14 February 2014.

The Existing Shares are already admitted to CREST. No further application for admission to CREST is accordingly required for the New Shares. All such shares, when issued and fully paid, may be held and transferred by means of CREST.

Open Offer Entitlements and Excess CREST Open Offer Entitlements held in CREST are expected to be disabled in all respects after 11.00 a.m. on 10 February 2014 (being the latest time and date for applications under the Open Offer). If the condition(s) to the Open Offer described above are satisfied, New Shares will be issued in uncertificated form to those persons who submitted a valid application by utilising the CREST application procedures and whose applications have been accepted by the Company. On 14 February 2014, the Receiving Agent will instruct Euroclear to credit the appropriate stock accounts of such persons with such persons' New Shares with effect from Capital Raising Admission (expected to be 14 February 2014). The stock accounts to be credited will be accounts under the same CREST participant IDs and CREST member account IDs in respect of which the USE Instruction was given.

Notwithstanding any other provision of this document, the Company reserves the right, with the prior written consent of Numis, to send Qualifying CREST Shareholders an Application Form instead of crediting the relevant stock account with Open Offer Entitlements and Excess CREST Open Offer Entitlements, and to allot and/or issue any Open Offer Shares in certificated form. In normal circumstances, this right is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or of any part of CREST) or on the part of the facilities and/or systems operated by the Registrar in connection with CREST.

For Qualifying Non-CREST Shareholders who have applied by using an Application Form, share certificates in respect of the New Shares validly taken up and any Excess Shares successfully applied for under the Excess Application Facility are expected to be despatched by post by 21 February 2014. No temporary documents of title will be issued and, pending the issue of definitive certificates, transfers will be certified against the UK share register of the Company. All documents or remittances sent by or to applicants, or as they may direct, will be sent through the post at their own risk. For more information as to the procedure for application, Qualifying Non CREST Shareholders are referred to paragraph 4.1 of this Appendix 2 and their respective Application Form.

9. TIMES AND DATES

The Company shall, in agreement with Numis and after consultation with its financial and legal advisers, be entitled to amend the dates that Application Forms are despatched or amend or extend the latest date for acceptance under the Open Offer and all related dates set out in this document and in such circumstances shall notify the UKLA, and make an announcement on a Regulatory Information Service and, if appropriate, by Shareholders but Qualifying Shareholders may not receive any further written communication.

If a supplementary prospectus is issued by the Company two or fewer Business Days prior to the latest time and date for acceptance and payment in full under the Open Offer specified in this document, the latest date for acceptance under the Open Offer shall be extended to the date that is three Business Days after the date of issue of the supplementary prospectus (and the dates and times of principal events due to take place following such date shall be extended accordingly).

10. TAXATION

Certain statements regarding United Kingdom and United States taxation in respect of the New Shares and the Open Offer are set out in paragraph 14 of Part VII of this document. Shareholders who are in any doubt as to their tax position in relation to taking up their entitlements under the Open Offer, or who are subject to tax in any jurisdiction other than the United Kingdom, should immediately consult a suitable professional adviser.

11. FURTHER INFORMATION

Your attention is drawn to the further information set out in this document and also, in the case of Qualifying Non-CREST Shareholders and other Qualifying Shareholders to whom the Company has sent Application Forms, to the terms, conditions and other information printed on the accompanying Application Form.

12. GOVERNING LAW AND JURISDICTION

The terms and conditions of the Open Offer as set out in this document, the Application Form and any noncontractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England. The courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with, the Open Offer, this document or the Application Form including, without limitation, disputes relating to any non-contractual obligations arising out of, or in connection with, the Open Offer, this document or the Application Form. By taking up Open Offer Shares, whether by way of their Open Offer Entitlement alone or also through the Excess Application Facility, in accordance with the instructions set out in this document and, where applicable, the Application Form, Qualifying Shareholders irrevocably submit to the jurisdiction of the courts of England and waive any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

APPENDIX 3

TERMS AND CONDITIONS OF THE FIRM PLACING AND THE PLACING

1. Definitions

"Regulation S" means Regulation S as promulgated under the Securities Act; and

"Securities Act" means the United States Securities Act of 1933, as amended.

2. Introduction

Participation in the Firm Placing and/or the Placing is only available to persons who are invited to participate by Numis. These terms and conditions apply to persons making an offer to subscribe for Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing. The Placee hereby agrees with Numis and the Company to be bound by these terms and conditions as being the terms and conditions upon which Firm Placed Shares will be sold under the Firm Placing and Placing Shares will be sold under the Placing (as applicable). A Placee shall, without limitation, become so bound if Numis confirms its allocation of Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing (as applicable) to such Placee.

Upon being notified of its allocation of Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing through receipt of a contract note, a Placee shall, subject to the provisions of paragraph 6 Appendix 3 with respect to the Placed Shares, be contractually committed to acquire the number of Firm Placed Shares and/or Placing Shares allocated to them (subject to reallocation of the Placing Shares by the Directors to the Open Offer or Offer for Subscription) at the Issue Price and to the fullest extent permitted by law, will be deemed to have agreed not to exercise any rights to rescind or terminate or otherwise withdraw from such commitment. Dealing may not begin before any notification is made.

3. Agreement to acquire Firm Placed Shares and/or Placing Shares

Each of the Firm Placing and the Placing is conditional upon the following conditions:

• (i) the Resolutions being passed at the General Meeting;
• (ii) the Placing Agreement having become unconditional in all respects save for the condition relating to Admission, and not being terminated in accordance with its terms before Capital Raising Admission becomes effective; and
• (iii) Capital Raising Admission becoming effective by not later than 8.00 a.m. (London time) on 14 February 2014 (or such later time and/or date as the Company and Numis may agree (being no later than 28 February 2014) in accordance with the terms of the Placing Agreement).

Subject to the above conditions, a Placee agrees to become a Shareholder and agrees to acquire Firm Placed Shares and/or Placing Shares (as applicable) at the Issue Price. The number of Firm Placed Shares issued to such Placee under the Firm Placing and/or Placing Shares issued to such Placee under the Placing (as applicable) shall be in accordance with the arrangements described above, subject to the provisions of paragraph 6 of this Appendix with respect to the Placing Shares.

4. Payment for Firm Placed Shares and Placing Shares

Each Placee undertakes to pay the Issue Price for the Firm Placed Shares and Placing Shares issued to such Placee in such manner as shall be directed by Numis. In the event of any failure by a Placee to pay as so directed by Numis, the relevant Placee shall be deemed hereby to have appointed Numis or any nominee of Numis to sell (in one or more transactions) any or all of the Firm Placed Shares and Placing Shares in respect of which payment shall not have been made as so directed and to have agreed to indemnify on demand Numis in respect of any liability for UK stamp duty and/or stamp duty reserve tax arising in respect of any such sale or sales.

5. Representations and Warranties

By receiving this document, each Placee and, in the case of paragraph 5.15 of this Appendix 3, any person confirming his agreement to subscribe for Firm Placed Shares and/or Placing Shares on behalf of a Placee or authorising Numis to notify a Placee's name to the Registrars, is deemed to acknowledge, agree, undertake, represent and warrant to each of Numis, the Registrars and the Company that:

• 5.1 the Placee has read this document in its entirety and acknowledges that its participation in the Firm Placing and/or the Placing (as applicable) shall be made solely on the terms and subject to the conditions set out in these terms and conditions, the Placing Agreement and the Articles. Such Placee agrees that these terms and conditions and the contract note issued by Numis to such Placee represents the whole and only agreement between the Placee, Numis and the Company in relation to the Placee's participation in the Firm Placing and/or the Placing (as applicable) and supersedes any previous agreement between any of such parties in relation to such participation. Accordingly, all other terms, conditions, representations, warranties and other statements which would otherwise be implied (by law or otherwise) shall not form part of these terms and conditions. Such Placee agrees that neither the Company, Numis nor any of their respective officers or directors will have any liability for any such other information or representation and irrevocably and unconditionally waives any rights it may have in respect of any such other information or representation;
• 5.2 the Placee has the power and authority to subscribe for the Placing Shares under the Placing and/or the Firm Placed Shares under the Firm Placing (as applicable) and to execute and deliver all documents necessary for such subscription;
• 5.3 neither Numis nor any person affiliated with Numis or acting on its behalf is responsible for or shall have any liability for any information, representation or statement contained in this Prospectus or any information previously published by or on behalf of the Company or any member of the Group and will not be liable for any decision by a Placee to participate in the Firm Placing and/or the Placing based on any information, representation or statement contained in this document or otherwise;
• 5.4 the Placee acknowledges that the New Shares will be admitted to the Official List, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the FCA (collectively, the "Exchange Information"), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that the Placee is able to obtain or access such Exchange Information without undue difficulty and is able to obtain access to such information or comparable information concerning any other publicly traded company without undue difficulty;
• 5.5 the Placee acknowledges that neither Numis, nor any person affiliated with Numis, nor any person acting on its behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Firm Placing and/or the Placing, and that participation in the Firm Placing and/or the Placing is on the basis that it is not and will not be a client of Numis for the purposes of the Firm Placing and/or the Placing (as applicable) and the Placee acknowledges that neither Numis, nor any person affiliated with Numis, nor any person acting on its behalf has any duties or responsibilities to the Placee for providing the protections afforded to its clients or for providing advice in relation to the Firm Placing and/or the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of Numis's rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

• 5.6 the Placee has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this Prospectus or their investment decision and the Placee has relied on its own investigation with respect to the Firm Placed Shares and/or the Placing Shares and the Company in connection with its investment decision;

• 5.7 in agreeing to purchase Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing (as applicable), the Placee is relying on this Prospectus and/or any supplementary prospectus issued by the Company in connection with the Capital Raising (as the case may be) or any regulatory announcement that may be issued by the Company and not on any other information or representation concerning the Group, the Firm Placing, the Placing, the Firm Placed Shares or the Placing Shares;

• 5.8 save in the event of fraud on its part (and to the extent permitted by the rules of the FCA), neither Numis nor any of its directors or employees shall be liable to a Placee for any matter arising out of the role of Numis as the Company's adviser and broker or otherwise, and that where any such liability nevertheless arises as a matter of law each Placee will immediately waive any claim against Numis and any of its directors and employees which a Placee may have in respect thereof;
• 5.9 the Placee has complied with all such laws and such Placee will not infringe any applicable law as a result of such Placee's agreement to purchase Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing (as applicable) and/or acceptance thereof or any actions arising from such Placee's rights and obligations under the their agreement to purchase Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing (as applicable) and/or acceptance thereof or under the Articles;
• 5.10 the Placee has accepted that its application is irrevocable and if for any reason it becomes necessary to adjust the expected timetable as set out in this Prospectus, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates. In particular, the Company shall, in agreement with Numis, be entitled to extend the last time and/or date for applications under the Firm Placing and/or the Placing, and any such extension will not affect applications already made, which will continue to be irrevocable;
• 5.11 to the fullest extent permitted by law, the Placee acknowledges and agrees to the disclaimers contained in this Prospectus and acknowledges and agrees to comply with the selling restrictions set out in this Prospectus;
• 5.12 the Shares have not been and will not be registered under the Securities Act, or under the securities legislation of, or with any securities regulatory authority of, any state or other jurisdiction of the United Sates or under the applicable securities laws of the Excluded Territories or where to do so may contravene local securities laws or regulations;
• 5.13 the Placee is not a person located in the United States and is subscribing for New Shares only in "offshore transactions" as defined in and pursuant to Regulation S and not as a result of any "directed selling efforts" as defined in Regulation S;
• 5.14 the Placee is not a resident of the Excluded Territories or the United States and acknowledges that the Firm Placed Shares and the Placing Shares have not been and will not be registered nor will a prospectus be prepared in respect of the Firm Placed Shares and/or the Placing Shares under the securities legislation of the Excluded Territories or the United States and, subject to certain exceptions, may not be offered or sold, directly or indirectly, in or into those jurisdictions;
• 5.15 the Placee does not have a registered address in, and is not a citizen, resident or national of, any jurisdiction in which it is unlawful to make or accept an offer of the Firm Placed Shares or Placing Shares and it is not acting on a non-discretionary basis for any such person;
• 5.16 the Placee has not, directly or indirectly, distributed, forwarded, transferred or otherwise transmitted this document or any other offering materials concerning the Placing to any persons within the United States, nor will it do any of the foregoing;
• 5.17 the Placee accepts that if either or both of the Placing or the Firm Placing does not proceed or the conditions to the Placing Agreement are not satisfied or the Placing Shares or Firm Placed Shares for which valid application are received and accepted are not admitted to listing on the premium segment of the Official List and to trading on the Main Market for any reason whatsoever then none of Numis or the Company, nor persons controlling, controlled by or under common control with any of them

nor any of their respective employees, agents, officers, members, stockholders, partners or representatives, shall have any liability whatsoever to it or any other person;

• 5.18 in the case of a person who confirms to Numis on behalf of a Placee an agreement to purchase Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing and/or who authorises Numis to notify such Placee's name to the Registrars, that person represents and warrants that he has authority to do so on behalf of the Placee;
• 5.19 the Placee has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Anti-Terrorism Crime and Security Act 2001, and the Money Laundering Regulations 2007 (the "Regulations") and undertakes to provide satisfactory evidence of its identity within such reasonable time (in each case to be determined in the absolute discretion of Numis) to ensure compliance with the Money Laundering Regulations 2007 and that if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
• 5.20 the Placee is not, and is not applying as nominee or agent for, a person to whom the issue would give rise to a liability under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depository receipts and clearance services) and that the Firm Placed Shares and/or the Placing Shares (as applicable) are not being acquired in connection with arrangements to issue depository receipts or to issue or transfer Firm Placed Shares and/or Placing Shares (as applicable) into a clearing system;
• 5.21 if you are a resident in the European Economic Area, you are a "qualified investor" within the meaning of the law in the Relevant Member State implementing Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive (Directive 2003/71/EC);
• 5.22 the Placee has not offered or sold and will not offer or sell any Firm Placed Shares and/or Placing Shares (as applicable) to persons in the UK prior to Capital Raising Admission except to "qualified investors" as defined in Article 2(1)(e) of the Prospectus Directive;
• 5.23 the Placee is (a) a person falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO") or (b) a person falling within article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Form Placed Shares or Placing Shares that are allocated to it for the purposes of its business or (c) a person to whom this document may otherwise be lawfully communicated;
• 5.24 the Placee has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Firm Placed Shares and or the Placed Shares (as applicable) in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;
• 5.25 the exercise by Numis of any rights or discretions under the Placing Agreement shall be within its absolute discretion and Numis need not have any reference to any Placee and shall have no liability to any Placee whatsoever in connection with any decision to exercise or not to exercise any such right and each Placee agrees that it shall have no rights against Numis or its directors or employees under the Placing Agreement; and

• 5.26 the Placee acknowledges that any money held in an account with Numis on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA. The Placee further acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Numis's money in accordance with the client money rules and will be used by Numis in the course of its own business; and the Placee will rank only as a general creditor of Numis.

• 5.27 the Placee accepts that the allocation of Placing Shares and Firm Placed Shares shall be determined by Numis in its absolute discretion but in consultation with the Company and that Numis may scale down any commitments for this purpose on such basis as it may determine;

• 5.28 time shall be of the essence as regards its obligations to settle payment for the Placing Shares or Firm Placed Shares and to comply with its other obligations under the Placing or Firm Placing;

The Placee acknowledges and understands that the Company and Numis will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, acknowledgements and undertakings.

The Placee indemnifies on an after-tax basis and hold harmless Numis and each person affiliated with Numis and any person acting on their behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix 3 of the document and further agrees that the provisions of this Appendix 3 of the document shall survive after completion of the Firm Placing and the Placing.

6. Scale back of the Placing Shares

The number of Placing Shares to be issued under the Placing may be scaled back at the discretion of the Directors (in consultation with Numis) in favour of

• (i) the Excess Application Facility of the Open Offer; and/or
• (ii) the Offer for Subscription.

7. Miscellaneous

The rights and remedies of Numis, the Registrars and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

On application, each Placee may be asked to disclose, in writing or orally to Numis:

• (i) if he is an individual, his nationality; or
• (ii) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

All documents will be sent at the Placee's risk. They may be sent by post to such Placee at an address notified to Numis.

The provisions of these terms and conditions of the Firm Placing and/or the Placing may be waived, varied or modified as regards specific Placees or on a general basis by Numis.

The contract to subscribe for Firm Placed Shares and/ or Placing Shares (as applicable) and the appointments and authorities mentioned herein will be governed by, and construed in accordance with, the laws of England and Wales. For the exclusive benefit of Numis, the Company and the Registrars, each Placee irrevocably submits to the exclusive jurisdiction of the English courts in respect of these matters. This does not prevent an action being taken against a Placee in any other jurisdiction.

In the case of a joint agreement to subscribe for Firm Placed Shares and/or Placing Shares (as applicable), references to a "Placee" in these terms and conditions are to each of such Placees and such joint Placees' liability is joint and several.

In addition to the provisions of paragraph 6 of this Appendix 3, Numis and the Company each expressly reserve the right to modify the Firm Placing and/or the Placing (including, without limitation, its timetable and settlement) at any time before allocations of Firm Placed Shares under the Firm Placing and/or of Placing Shares under the Placing are determined.

APPENDIX 4

TERMS AND CONDITIONS OF THE OFFER FOR SUBSCRIPTION

Introduction

As explained in the letter from the Chairman set out in Part I of this document, the Company is proposing to raise approximately £75.0 million (approximately £72.9 million net of expenses) by way of the Capital Raising. Assuming a Capital Raising size of £75.0 and that the Capital Raising is taken up in full, 30,303,030 of the New Shares will be issued through the Firm Placing and up to 15,151,826 of the New Shares will be issued through the Placing, Open Offer and Offer for Subscription. The Board has the ability to increase the size of the Issue by up to one third to approximately £100.0 million (before expenses).

This Appendix 4 and, where applicable, the accompanying Subscription Form, contain the formal terms and conditions of the Offer for Subscription. The Offer for Subscription is only being made in the UK but, subject to applicable law, the Company may allot Offer for Subscription Shares on a private placement basis to applicants in other jurisdictions. Such selected applicants in non-UK jurisdictions will be invited in writing by Numis. All other recipients of this document or a Subscription Form in non-UK jurisdictions should consider them as sent for information only. Your attention is drawn to the letter from the Chairman in Part I of this document, which sets out the background to and reasons for the Capital Raising.

If you have been invited in writing by Numis to apply for Offer for Subscription Shares through CREST, your attention is drawn to paragraphs 2 to 8 of this Appendix 4. If you have not been invited in writing by Numis to apply for Offer for Subscription Shares through CREST, your attention is drawn to paragraphs 1, 3, 4, 5, 6, 7 and 8 of this Appendix 4.

The Capital Raising and the contract created under the Offer for Subscription by the acceptance of a Subscription Application (as defined below), in the case of a Subscription Applicant (as defined below), or the sending of valid USE Instruction, in the case of a Selected Subscription Applicant (as defined below), will be conditional on:

• the passing of the Resolutions without amendment to be proposed at the General Meeting to be held on Wednesday, 12 February 2014;
• the Placing Agreement having become unconditional in all respects save for the condition relating to Admission and not being terminated in accordance with its terms before Capital Raising Admission occurs; and
• Admission occurring by not later than 8.00 a.m. on 14 February 2014 (or such later time and date as the Company and Numis may agree, not being later than 8.00 a.m. on 28 February 2014).

In the case of a joint application, references to you in these terms and conditions of application are to each of you, and your liability is joint and several.

The Company reserves the right to reject in whole or part or to scale back or limit any application under the Offer for Subscription.

Unless otherwise defined herein, defined terms in the Prospectus shall have the same meaning in these terms and conditions and in the notes on how to complete the Subscription Form, and:

"Overseas Applicants" means persons who apply for New Shares under the Offer for Subscription with registered addresses outside of the United Kingdom or who are citizens or residents of countries outside the United Kingdom;

"Selected Subscription Application" means an application for New Shares under the Offer for Subscription made by sending a USE Instruction through CREST in accordance with these terms and conditions;

"Selected Subscription Applicant" means a person invited in writing by Numis to apply under the Offer for Subscription through CREST;

"Subscription Applicant" means a person or persons (in the case of joint applicants) whose name(s) appear(s) on the registration details (Box 2A) of a Subscription Form;

"Subscription Application" means the offer made by a Subscription Applicant by completing a Subscription Form and posting (or delivering) it to the Receiving Agent as specified in the Prospectus; and

"Subscription Entitlement" means in respect of each Selected Subscription Applicant the entitlement to apply for New Shares pursuant to the Offer for Subscription through CREST.

1. Terms and conditions for all applicants other than Selected Subscription Applicants

1.1 Procedure for application and withdrawal rights

If you are in any doubt as to the action you should take, or the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent adviser duly authorised under FSMA who specialises in advising on the acquisition of shares and other securities.

1.1.1 General

(a) Application procedures

Persons wishing to apply for New Shares pursuant to the Offer for Subscription should complete and sign the enclosed Subscription Form in accordance with the instructions thereon and send or deliver it, together with a remittance for the full amount payable, to Capita Asset Services, either by post or by hand (during normal business hours only) at Capita Asset Services, Corporate Actions, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible and, in any event, so as to arrive no later than 11.00 a.m. on 11 February 2014, at which time the Offer for Subscription will close. Subscription Forms received after this time will not be accepted. Subscription Applications, once made, will be irrevocable (save for any statutory withdrawal rights arising after the publication of a prospectus supplementing this document) and will not be acknowledged. Multiple applications will not be accepted.

Numis and the Company reserve the right (but shall not be obliged) to treat a Subscription Form as valid and binding on the person(s) by whom or for whose benefit it is lodged even if such a Subscription Form is not completed in accordance with the relevant instructions or not accompanied by a valid power of attorney where required or which otherwise does not strictly comply with the terms and conditions of the Offer for Subscription. Numis and the Company further reserve the right (but shall not be obliged) to accept either Subscription Forms and remittances received after 11.00 a.m. on 10 February 2014 but not later than 2.00 p.m. on 11 February 2014 or applications in respect of which remittances are received before 2.00 p.m. on 11 February 2014 from authorised persons (as defined in FSMA) specifying the New Shares applied for and undertaking to lodge the Subscription Form in due course but, in any event, within two Business Days. If a Subscription Form is sent by post, the person applying is recommended to allow at least four working days for delivery.

(b) Payments

All payments must be made by cheque or banker's draft in pounds sterling drawn on an account at a bank or building society in the United Kingdom, the Channel Islands or the Isle of Man, which is either a settlement member of the Cheque and Credit Clearing Company Limited or of the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through the facilities provided for members of either of those companies, and must bear the appropriate sort code number in the top right-hand corner. Any application which does not comply with these requirements will be treated as invalid.

Cheques or banker's drafts should be made payable to "Capita Registrars Limited – re: IP Group PLC – Offer for Subscription a/c and crossed A/C payee only."

Any person returning a Subscription Form with a remittance in the form of a cheque thereby warrants that the cheque will be honoured on first presentation. If cheques or banker's drafts are presented for payment before the conditions of the Offer for Subscription are satisfied, the monies will be kept in a separate bank account until the conditions are fully met. In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 14 February 2014 (or such later time and/or date, being not later than 8.00 a.m. on 28 February 2014, as Numis may agree), the Offer for Subscription will lapse and all application monies will be returned (at the Subscription Applicant's sole risk) to Subscription Applicants as soon as practicable thereafter. If any cheque is not honoured on first presentation, the relevant application may be deemed to be invalid. The Company reserves the right to instruct the Receiving Agent to seek special clearance of cheques and banker's drafts to allow the Company to obtain value for remittances at the earliest opportunity.

(c) Effect of application

All documents and remittances sent by post by or to a Subscription Applicant (or as the Subscription Applicant may direct) will be sent at the Subscription Applicant's own risk. By completing and delivering a Subscription Form, you (as the Subscription Applicant(s)):

• (i) agree with the Company and Numis that all applications under the Offer for Subscription, and contracts resulting therefrom, and any non-constitutional obligations related thereto, shall be governed by, and construed in accordance with, the laws of England;
• (ii) confirm to the Company and Numis that in making the application you are not relying on any information or representation other than that contained in this document, and you accordingly agree that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and you further agree that, having had the opportunity to read this document, you will be deemed to have had notice of all the information concerning the Company contained herein (including information incorporate by reference);
• (iii) confirm to the Company and Numis that no person has been authorised to give any information or make any representation concerning the Company or the Group or the New Shares (other than as contained in this document) and if given or made any such information or representation should not be relied upon as having been authorised by the Company and Numis;
• (iv) represent and warrant to the Company and Numis that you have the right, power and authority, and have taken all action necessary, to make the application under the Offer for Subscription and to execute, deliver and exercise your rights, and perform your obligations under any contracts resulting therefrom and that you are not a person otherwise prevented by legal or regulatory restrictions from applying for New Shares or acting on behalf of any such person on a non-discretionary basis;

• (v) request that the New Shares to which you will become entitled be issued to you on the terms set out in this document and the Subscription Form and subject to the Articles;

• (vi) represent and warrant to the Company and Numis that you are not, and you are not applying on behalf of any person who is, a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any jurisdiction outside the United Kingdom and you are not applying with a view to reoffering, reselling, transferring or delivering any of the New Shares which are the subject of this application to, or for the benefit of, a person who is a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any jurisdiction outside the United Kingdom (in each case except where proof satisfactory to the Company and Numis has been provided to the Company that you are able to accept the invitation by the Company free of any requirement which the Company and Numis, in their absolute discretion, regard as unduly burdensome) nor are you acting on behalf of any such person on a non-discretionary basis;

• (vii) represent and warrant to the Company and Numis that you are not and nor are you applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986;
• (viii) confirm to the Company and Numis that in making the application you are not relying and have not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or your investment decision;
• (ix) irrevocably authorise the Company or any person authorised by it to do all things necessary to effect registration of any New Shares subscribed by or issued to you into your name(s) or into the name(s) of any person(s) in whose favour the entitlement to any such New Shares has been transferred and authorise any representative of the Company to execute any document required; and
• (x) warrant that, if you are an individual, you are not under the age of 18.

All enquiries in connection with the procedure for application and completion of the Subscription Form should be addressed to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Please note the Registrar cannot provide financial advice on the merits of the Offer for Subscription.

1.1.2 Withdrawal rights

Persons wishing to exercise statutory withdrawal rights pursuant to section 87Q(4) of FSMA after the publication by the Company of a prospectus supplementing this document must do so by lodging a written notice of withdrawal (which shall include a notice sent by any form of electronic communication) with Capita Asset Services, by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to be sent, not later than two Business Days after the date on which the supplementary prospectus is published. Notice of withdrawal given by any other means or which is deposited with or received by the Receiving Agent after expiry of such period will not constitute a valid withdrawal.

2. Terms and conditions for Selected Subscription Applicants

2.1 Procedure for application and payment

Selected Subscription Applicants should refer to the CREST Manual for further information on the CREST procedures referred to below.

2.1.1 General

Each Selected Subscription Applicant will receive a credit to its stock account in CREST of its Subscription Entitlement equal to the maximum number of New Shares for which it is entitled to apply to acquire under the Offer for Subscription and Selected Subscription Applicants may apply for any whole number of New Shares up to and including such number. Selected Subscription Applications under the Offer for Subscription will be allocated in such manner as the Directors may determine, in their absolute discretion, and no assurance can be given that the applications by Selected Subscription Applicants will be met in full or in part or at all. Excess monies in respect of applications which are not met in full will be returned to the Selected Subscription Applicant (at the Selected Subscription Applicant's risk) without interest as soon as practicable by way of CREST payment or cheque if required.

The CREST stock account to be credited will be an account under the participant ID and member account ID advised to Numis by the Selected Subscription Applicant prior to 11.00 a.m. on 13 February 2014.

If, for any reason, the Subscription Entitlements cannot be admitted to CREST by, or the stock accounts of Selected Subscription Applicants cannot be credited on 5 February 2014, or such later time and/or date as the Company may decide, Selected Subscription Applicants will be advised by Numis to apply in the Offer for Subscription using the Subscription Form attached to the Prospectus and in accordance with the "Terms and Conditions of Application under the Offer for Subscription for all Applicants other than Selected Subscription Applicants" in paragraph 1 of this Appendix 4 above.

A Subscription Entitlement may not be sold or otherwise transferred.

Selected Subscription Applicants should note that, although the Subscription Entitlements will be admitted to CREST, they will have limited settlement capabilities. The Subscription Entitlements will be neither tradable nor listed and applications may only be made by the Selected Subscription Applicants originally entitled. There will be no market claims in respect of Subscription Entitlements. Nor will it be permitted to withdraw Subscription Entitlements from CREST.

All enquiries from Selected Subscription Applicants in connection with the procedure for application of Subscription Entitlements should be addressed to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Capita Asset Services can be contacted on 0871 664 0321 or, if telephoning from outside the UK, on +44 (0)208 639 3399 between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday. Calls to the Capita Asset Services 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider's network extras. Calls to the Shareholder Helpline from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Please note the Registrars cannot provide financial advice on the merits of the Offer for Subscription.

Notwithstanding any other provision of this Prospectus, the Company reserves the right to send Selected Subscription Applicants a Subscription Form instead of crediting the relevant stock account with Subscription Entitlements, and to allot and/or issue any New Shares in certificated form. In normal circumstances, this right is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or of any part of CREST) or on the part of the facilities and/or systems operated by the Receiving Agent in connection with CREST.

2.1.2 USE Instructions

Selected Subscription Applicants who want to apply for New Shares must send a USE Instruction to Euroclear which, on its settlement, will have the following effect:

• (a) the crediting of a stock account of the Receiving Agent under the participant ID and member account ID specified below, with a number of Subscription Entitlements corresponding to the number of New Shares applied for; and
• (b) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Receiving Agent in respect of the amount specified in the USE Instruction which must be the full amount payable on application for the number of New Shares referred to in 2.1.2(a) above).

2.1.3 Content of USE Instruction in respect of Subscription Entitlements

The USE Instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

• (a) the number of the New Shares for which the application is being made (and hence the number of the Subscription Entitlement(s) being delivered to the Receiving Agent);
• (b) the ISIN of the Offer for Subscription Entitlement. This is GB00BJ3VWN96;
• (c) the CREST participant ID of the accepting CREST member;
• (d) the CREST member account ID of the accepting CREST Member from which the Subscription Entitlements are to be debited;
• (e) the Participant ID of the Receiving Agent. This is 7RA33;
• (f) the member account ID of the Receiving Agent. This is 28170OFS;
• (g) the amount payable by means of a CREST payment on settlement of the USE Instruction. This must be the full amount payable on application for the number of New Shares referred to in 2.1.3(a) above;
• (h) the intended settlement date. This must be before 11.00 a.m. on 11 February 2014; and
• (i) the corporate action number for the Offer for Subscription. This will be available by viewing the relevant corporate action details in CREST.

In order for the application in respect of a Subscription Entitlement under the Offer for Subscription to be valid, the USE Instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 13 February 2014.

In order to assist prompt settlement of the USE Instruction, CREST members may consider adding the following non-mandatory fields to the USE instruction:

• (i) a contact name and telephone number (in the free format shared note field); and
• (ii) a priority of at least 80.

Selected Subscription Applicants should note that the last time at which a USE instruction may settle on 13 February 2014 in order to be valid is 11.00 a.m. on that day. Please note that automated CREST generated claims and buyer protection will not be offered on the Subscription Entitlement facility.

In the event that the Offer for Subscription does not become unconditional by 11.00 a.m. on 14 February 2014 or such later time and date as the Company and Numis may agree (being no later than 28 February 2014), the Offer for Subscription will lapse, the Subscription Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Selected Subscription Applicant by way of a CREST payment, without interest, as soon as practicable thereafter (or if required by cheque). Any interest earned on such monies, will be retained for the benefit of the Company.

2.1.4 Validity of application

A USE instruction complying with the requirements set out in these terms and conditions of this Appendix 4 which settles by no later than 11.00 a.m. on 11 February 2014 will constitute a valid and irrevocable application under the Offer for Subscription.

2.1.5 CREST procedures and timings

Selected Subscription Applicants should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in relation to the input of a USE Instruction and its settlement in connection with the Offer for Subscription. It is the responsibility of the CREST Member concerned to take such action as shall be necessary to ensure that a valid application is made as stated above by 11.00 a.m. on 13 February 2014. In this connection Selected Subscription Applicants are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

In addition, it should be noted that this paragraph 2 only applies to selected persons invited by Numis. Interested persons will need to have registered their interest in applying through CREST and to have been formally invited by Numis to do so by 11 February 2014 in order to allow time for the crediting of Subscription Entitlements. Persons who have not been invited by Numis but wishing to have New Shares applied for pursuant to the Offer for Subscription credited to their CREST accounts should refer to paragraph 1 of this Appendix 4 and the Subscription Form.

2.1.6 Incorrect or incomplete applications

If a USE Instruction includes a CREST payment for an incorrect sum, the Company, through the Receiving Agent, reserves the right:

• (a) to reject the application in full and refund the payment to the CREST Member in question (without interest);
• (b) in the case that an insufficient sum is paid, to treat the application as a valid application for such lesser whole number of New Shares as would be able to be applied for with that payment at the Issue Price, refunding any unutilised sum to the CREST Member in question (without interest); and
• (c) in the case that an excess sum is paid, to treat the application as a valid application for all the New Shares referred to in the USE Instruction, refunding any unutilised sum to the CREST Member in question (without interest), save for amounts less than £5 which will be retained for the benefit of the Company.

2.1.7 Effect of valid application

A Selected Subscription Applicant who makes or is treated as making a valid application in accordance with the procedures set out in these terms and conditions of this Appendix 4 shall:

(a) pay the amount payable on application in accordance with the above procedures by means of a CREST payment in accordance with the CREST payment arrangements (it being acknowledged that the payment to Capita Registrar's payment bank in accordance with the CREST payment arrangements shall, to the extent of the payment, discharge in full the obligation of the CREST Member to pay to the Company the amount payable on application);

• (b) agree with the Company and Numis that all applications under the Offer for Subscription and contracts resulting therefrom and any non-contractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England;
• (c) confirm to the Company and Numis that in making such application he is not relying on any information in relation to the Company other than that contained in this document and agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such other information and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all the information concerning the Company contained herein (including information incorporated by reference);
• (d) represent and warrant to the Company and Numis that he is the Selected Subscription Applicant originally entitled to the Subscription Entitlements;
• (e) represent and warrant to the Company and Numis that he has the right, power and authority, and has taken all action necessary, to make the application under the Offer for Subscription and to execute, deliver and exercise his rights, and perform his obligations, under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for New Shares or acting on behalf of any such person on a non-discretionary basis;
• (f) request that the New Shares to which he will become entitled be issued to him on the terms set out in this document and subject to the Articles;
• (g) represent and warrant to the Company and Numis that he is not, and is not applying on behalf of any person, who is, a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any jurisdiction outside the United Kingdom and he is not applying with a view to reoffering, reselling, transferring or delivering any of the New Shares which are the subject of this application to, or for the benefit of, a person who is a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any jurisdiction outside the United Kingdom (in each case except where proof satisfactory to the Company and Numis has been provided to the Company that he is able to accept the invitation by the Company free of any requirement which the Company or Numis (in their absolute discretion) regard as unduly burdensome), nor is he acting on behalf of any such person on a non-discretionary basis;
• (h) represent and warrant to the Company and Numis that he is not, and nor is he applying as, nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986;
• (i) confirm to the Company and Numis that in making the application he is not relying and has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or his investment decision; and
• (j) irrevocably authorise the Company or any person authorised by it to do all things necessary to effect registration of any New Shares subscribed by or issued to you into your name(s) or into the name(s) of any person(s) in whose favour the entitlement to any such New Shares has been transferred and authorise any representative of the Company to execute any document required.

2.1.8 Company's discretion as to the rejection and validity of applications

The Company may in its sole discretion:

• (a) treat as valid (and binding on the Selected Subscription Applicant concerned) an application which does not comply in all respects with the requirements as to validity set out or referred to in these terms and conditions of this Appendix 4;
• (b) accept an alternative properly authenticated dematerialised instruction from a Selected Subscription Applicant as constituting a valid application in substitution for or in addition to a USE Instruction and subject to such further terms and conditions as the Company may determine;
• (c) treat a properly authenticated dematerialised instruction (in this sub-paragraph the "first instruction") as not constituting a valid application if, at the time at which the Receiving Agent receives a properly authenticated dematerialised instruction giving details of the first instruction or thereafter, either the Company or the Receiving Agent has received actual notice from Euroclear of any of the matters specified in Regulation 35(5)(a) of the CREST Regulations in relation to the first instruction. These matters include notice that any information contained in the first instruction was incorrect or notice of lack of authority to send the first instruction; and
• (d) accept an alternative instruction or notification from a Selected Subscription Applicant, or extend the time for settlement of a USE instruction or any alternative instruction or notification, in the event that, for reasons or due to circumstances outside the control of any Selected Subscription Applicant, the Selected Subscription Applicant is unable validly to apply for New Shares by means of the above procedures. In normal circumstances, this discretion is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST) or on the part of the facilities and/or systems operated by the Registrar in connection with CREST.
• 2.1.9 Settlement

Subscription Entitlements held in CREST are expected to be disabled in all respects after 11.00 a.m. on 13 February 2014. If the conditions to the Offer for Subscription described above are satisfied, New Shares will be issued in uncertificated form to those persons who submitted a valid application for New Shares by utilising the CREST application procedures and whose applications have been accepted by the Company. The stock accounts to be credited will be accounts under the same CREST participant IDs and CREST member account IDs in respect of which the USE Instruction was given.

Subscription Entitlements are expected to be credited to stock accounts of Selected Subscription Applicants in CREST as soon as possible after 8.00 a.m. on 11 February 2014. The latest time and date for payment in full under the Offer for Subscription and settlement of relevant CREST instructions is expected to be 11.00 a.m. on 13 February 2014 with Capital Raising Admission and commencement of dealings in Capital Raising Shares expected to take place at 8.00 a.m. on 14 February 2014.

Selected Subscription Applicants should note that, although the Subscription Entitlements will be credited to CREST and be enabled for settlement, applications in respect of Subscription Entitlements may only be made by the Selected Subscription Applicant originally entitled.

3. Money Laundering

3.1 Holders of Subscription Forms

The verification of identity requirements of the Money Laundering Regulations 2007 will apply and verification of the identity of the Subscription Applicants for New Shares may be required. If a Subscription Form is submitted by a UK regulated broker or intermediary acting as agent and which is itself subject to the Money Laundering Regulations 2007, any verification of identity requirements are the responsibility of such broker or intermediary and not of the Receiving Agent. In such case, the lodging agent's stamp should be inserted in the Subscription Form. If the value at the Issue Price of the New Shares for which you are applying does not exceed fifteen thousand euros (€15,000) (or the sterling equivalent) (and is not one of a series of linked applications, the aggregate value of which exceeds that amount), you will not be required to satisfy the verification of identity requirements described below. However, if such a value exceeds that amount, then failure to provide the necessary evidence of identity may result in your application being treated as invalid or in delaying acceptance of your application. In order to avoid this, all payments should be made by means of a cheque drawn by the person named in the Subscription Form (or one of such persons). If this is not practicable and you use a cheque drawn by a third party (for example, a building society cheque or banker's draft), you should:

• (a) write the name, address and date of birth of the person named on the Subscription Form (or one of such persons) on the back of the cheque, building society cheque or banker's draft;
• (b) if a building society cheque or banker's draft is used, ask the building society or bank to endorse the name and account number of the person whose building society or bank account is being debited on the cheque or banker's draft; and
• (c) if you are making the application as agent for one or more persons, indicate on the Subscription Form whether you are a UK or EC regulated person or institution (e.g. a bank or broker) and specify your status. If you are not a UK or EC regulated person or institution, you should contact Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

If you deliver your Subscription Form personally by hand, you should ensure that you have with you evidence of your identity bearing your photograph (e.g. your passport). In any event, if it appears to Capita Asset Services that a Subscription Applicant is acting on behalf of some other person, further verification of the identity of any person on whose behalf the Subscription Applicant appears to be acting may be required. In relation to any application in respect of which the necessary verification of the identity of the Subscription Applicant or the person on whose behalf the Subscription Applicant appears to be acting has not been received on or before 11.00 a.m. on 13 February 2014 the Company may, in their absolute discretion, elect to treat the relevant application as invalid and/or delay the allotment of the relevant number of New Shares until the necessary verification has been provided. If a Subscription Form is treated as invalid the money paid in respect of the application will be returned (at the Subscription Applicants' risk and without interest).

By lodging a Subscription Form, each Subscription Applicant undertakes to provide such evidence of its identity at the time of lodging the Subscription Form or, at the absolute discretion of the Company and Numis, at such specified time thereafter as may be requested to ensure compliance with the Money Laundering Regulations 2007.

Capita Asset Services is entitled, in its absolute discretion, to determine whether verification of identity requirements apply to any Subscription Applicant and whether such requirements have been satisfied. Neither Capita Asset Services, nor the Company nor Numis shall be responsible or liable to any person for any loss or damage suffered as a result of the exercise of their discretion hereunder.

If the verification of identity requirements apply, failure to provide the necessary evidence of identity within a reasonable time may result in delays in the despatch of share certificates or in crediting CREST accounts. If, within a reasonable time following a request for verification of identity, Capita Asset Services has not received evidence satisfactory to it as aforesaid, the Company or Numis may treat the relevant application as invalid, in which event the monies payable on acceptance of the Offer for Subscription will be returned (at the acceptor's risk) without interest to the account of the bank or building society on which the relevant cheque or banker's draft was drawn.

Submission of a Subscription Form with the appropriate remittance will constitute a warranty to each of the Company, Capita Asset Services and Numis from the applicant that the Money Laundering Regulations 2007 will not be breached by application of such remittance.

3.2 Subscription Entitlements in CREST

If you hold your Subscription Entitlements in CREST and apply for New Shares in respect of all or some of your Subscription Entitlements as agent for one or more persons and you are not a UK or EU regulated person or institution (e.g. a UK financial institution), then, irrespective of the value of the application, Capita Asset Services is obliged to take reasonable measures to establish the identity of the person or persons on whose behalf you are making the application. You must therefore contact Capita Asset Services before sending any USE or other instruction so that appropriate measures may be taken.

Submission of a USE Instruction which on its settlement constitutes a valid application as described above constitutes a warranty and undertaking by the Selected Subscription Applicant to provide promptly to Capita Asset Services such information as may be specified by Capita Asset Services as being required for the purposes of the Money Laundering Regulations 2007. Pending the provision of evidence satisfactory to Capita Asset Services as to identity, Capita Asset Services may in its absolute discretion take, or omit to take, such action as it may determine to prevent or delay issue of the New Shares concerned. If satisfactory evidence of identity has not been provided within a reasonable time, then the application for the New Shares represented by the USE Instruction will not be valid. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory evidence.

4. Taxation

Your attention is drawn to the section headed "UK Taxation" set out in paragraph 14 of Part VII of this document.

5. Overseas Applicants

The document has been approved by the FCA, being the competent authority in the United Kingdom, in accordance with section 85 of FSMA.

5.1 General

The Offer for Subscription is only made in the UK but, subject to applicable law, the Company may allot New Shares on a private placement basis to applicants in other jurisdictions. Such selected applicants in non-UK jurisdictions will be invited in writing by Numis. All other recipients of this document or a Subscription Form in non-UK jurisdictions should consider them as sent for information only.

The making of or acceptance of the Offer for Subscription to or by persons who have registered addresses outside the United Kingdom, or who are resident in countries outside the United Kingdom, may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to take up their rights.

It is also the responsibility of all persons (including, without limitation, custodians, nominees, agents and trustees) outside the United Kingdom wishing to take up New Shares to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental or other consents which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such jurisdiction. The comments set out in this paragraph 5.1 are intended as a general guide only and any persons who are in doubt as to their position should consult their professional adviser without delay.

Receipt of this document and/or any Subscription Form will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this document and/or a Subscription Form must be treated as sent for information only and should not be copied or redistributed.

No person receiving a copy of this document and/or a Subscription Form in any jurisdiction other than the United Kingdom may treat the same as constituting an invitation or offer to him nor should he in any event use the Subscription Form unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to him or the Subscription Form could lawfully be used or dealt with without contravention of any registration or other legal requirements. In such circumstances, this document and the Subscription Form are to be treated as sent for information only and should not be copied or redistributed.

Persons (including, without limitation, custodians, nominees and trustees) receiving a copy of this document and/or a Subscription Form should not distribute or send the same in or into any jurisdiction where to do so would or might contravene applicable security laws or regulations. If a Subscription Form is received by any person in any such jurisdiction, or by his agent or nominee, he must not seek to take up New Shares referred to in the Subscription Form or in this document unless the Company and Numis (at their absolute discretion) determine that such actions would not violate applicable registration or other legal or regulatory requirements. Any person (including, without limitation, custodians, nominees and trustees) who does forward this document or a Subscription Form into any such jurisdictions (whether pursuant to a contractual or legal obligation or otherwise) should draw the recipient's attention to the contents of this paragraph 5.

Subject to paragraphs 5.2 and 5.3 below, any person (including, without limitation, agents, nominees and trustees) outside the United Kingdom wishing to participate in the Offer for Subscription must satisfy himself as to full observance of the applicable laws of any relevant jurisdiction, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such jurisdictions. The comments set out in this paragraph 5 are intended as a general guide only and any Overseas Applicants who are in any doubt as to their position should consult their professional advisers without delay.

The Company and Numis reserve the right to treat as invalid and will not be bound to allot or issue any New Shares in respect of any acceptance or purported acceptance of the offer of New Shares which:

• (a) appears to the Company or its agents to have been executed, effected or despatched from outside the United Kingdom unless the Company and Numis are satisfied that such action would not result in the contravention of any registration or other legal requirement; or
• (b) in the case of a Subscription Form, provides an address for delivery of the share certificates in or, in the case of a credit of New Shares in CREST, to a CREST Member or CREST sponsored member whose registered address would be in any jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates or make such a credit unless the Company is satisfied that such action would not result in the contravention of any registration or other legal requirement.

Despite any other provision of this document or the Subscription Form, the Company and Numis reserve the right to permit any person to take up New Shares under the Offer for Subscription if the Company and Numis in their sole and absolute discretion are satisfied that the transaction in question is exempt from or not subject to the registration or other legal or regulatory requirements giving rise to the restrictions in question.

All subscription monies must be in pounds sterling by cheque or banker's draft and should be drawn on a bank in the UK, made payable to "Capita Registrars – re: IP Group PLC – Offer for Subscription a/c and crossed A/C payee only".

5.2 Representations and warranties relating to Overseas Applicants

The attention of Overseas Applicants is drawn to the statements, confirmations, agreements, representations and warranties set out in paragraphs 1.1.1 and 2.1.7 of this Appendix 4.

5.3 Further information

Your attention is drawn to the further information set out in this document and to the terms, conditions and other information printed on the accompanying Subscription Form.

5.4 Waiver

The provisions of this paragraph 5 and of any other terms of the Offer for Subscription relating to Overseas Applicants may be waived, varied or modified as regards specific applicants or on a general basis by the Company and Numis in their absolute discretion. Subject to this, the provisions of this paragraph 5 supersede any terms of the Offer for Subscription inconsistent herewith. References in this paragraph 5 to Shareholders shall include references to the person or persons executing a Subscription Form and in the event of more than one person executing a Subscription Form, the provisions of this paragraph 5 shall apply to them jointly and to each of them.

6. Times and dates

The Company shall, in agreement with Numis and after consultation with its financial and legal advisers, be entitled to amend the dates that Subscription Forms are despatched or amend or extend the latest date for acceptance under the Offer for Subscription and all related dates set out in this document and in such circumstances notify the Financial Conduct Authority, and make an announcement on a Regulatory Information Service.

If a supplementary prospectus is issued by the Company two or fewer Business Days prior to the latest time and date for acceptance and payment in full under the Offer for Subscription specified in this document, the latest date for acceptance under the Offer for Subscription shall be extended to the date that is three Business Days after the date of issue of the supplementary prospectus (and the dates and times of principal events due to take place following such date shall be extended accordingly).

If for any reason it becomes necessary to adjust the expected timetable as set out in the Prospectus, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates. In particular, the Directors have the discretion to extend the last time and/or date for Applications, and any such extension will not affect Selected Subscription Applications already made, which will continue to be irrevocable.

7. Scaling back

The number of Offer for Subscription Shares may be scaled back at the discretion of the Directors (in consultation with Numis) in favour of:

• (i) the Excess Application Facility; and/or
• (ii) the Placing.

8. Governing law

The terms and conditions of the Offer for Subscription as set out in this Appendix 4 and the Subscription Form shall be governed by, and construed in accordance with, English law. The Courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Offer for Subscription, this document and the Subscription Form.

Persons who take up New Shares in accordance with this Appendix 4 and the Subscription Form irrevocably submit to the jurisdiction of the Courts of England and Wales and waive any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient form.

NOTES ON HOW TO COMPLETE THE SUBSCRIPTION FORM

If you are a Qualifying Shareholder you should first read the Terms and Conditions of the Offer for Subscription in the Prospectus.

Applications should be returned so as to be received by Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no later than 11.00 a.m. on 10 February 2014.

HELP DESK: If you have any questions relating to the completion and return of the Subscription Form, please telephone Capita Asset Services on 0871 664 0321 or, if telephoning from outside the UK, on +44 (0)208 639 3399 between 9.00 a.m. to 5.30 p.m. Monday to Friday (London time). Calls to the Capita Asset Services 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider's network extras. Calls to the Shareholder Helpline from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Please note the Registrars cannot provide financial advice on the merits of the Capital Raising or as to whether you should take up your entitlement.

1. Application

Fill in (in figures) in Box 1 the amount you wish to subscribe for. Applications should be for a minimum of £1,000 and thereafter in multiples of £500. Financial intermediaries who are investing on behalf of clients should make separate applications for each client.

2A. Holder details

Fill in (in block capitals) the full name and address of the first holder and the names only of any joint holders. Applications may only be made by persons aged 18 or over. In the case of joint holders only the first named may bear a designation reference. A maximum of four joint holders is permitted. All holders named must sign the Subscription Form at section 3.

2B. CREST

If you wish your New Shares to be deposited in a CREST Account in the name of the holders given in section 2A, enter in section 2B the details of that CREST Account. Where it is requested that New Shares be deposited into a CREST Account please note that payment for such Shares must be made prior to the day such New Shares might be allotted and issued. It is not possible for an applicant to request that New Shares be deposited in their CREST Account on a delivery against payment basis. Any Subscription Form received containing such a request will be rejected.

3. Signature

All holders named in section 2A must sign section 3 and insert the date. The Subscription Form may be signed by another person on behalf of each holder if that person is duly authorised to do so under a power of attorney. The power of attorney (or a copy duly certified by a solicitor or a bank) must be enclosed for inspection (which originals will be returned by post at the addressee's risk). A corporation should sign under the hand of a duly authorised official whose representative capacity should be stated and a copy of a notice issued by the corporation authorising such person to sign should accompany the Subscription Form.

4. Cheque/banker's draft, payment details

Payment must be made by a cheque or banker's draft accompanying your application. Payment by cheque or banker's draft must accompany your Subscription Form and be for the exact amount entered in Box 1 of your Subscription Form. Your cheque or bankers draft must be made payable to "Capita Registrars Limited re: IP Group PLC – Offer for Subscription A/C" and crossed "A/C Payee Only". Third party cheques will not be accepted with the exception of building society cheques or bankers drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the building society cheque or bankers draft to such effect. Your cheque or bankers draft must be drawn in sterling on an account at a bank branch in the UK or the Channel Islands and must bear a UK bank sort code number in the top right hand corner. No receipt will be issued.

5. Reliable introducer declaration

Applications with a value greater than fifteen thousand euros (€15,000) (or the sterling equivalent) will be subject to the United Kingdom's verification of identity requirements. This will involve you providing the verification of identity documents listed below UNLESS you can have the declaration provided at section 5 of the Subscription Form given and signed by a firm acceptable to the Company. In order to ensure your application is processed in time and efficiently all applicants are strongly advised to have the declaration provided in section 5 of the Subscription Form completed and signed by a suitable firm.

If the declaration in section 5 cannot be completed and the value of the application is greater than fifteen thousand euros (€15,000) (or the sterling equivalent), in accordance with internationally recognised standards for the prevention of money laundering, the documents listed below must be provided with the completed Subscription Form as appropriate. Notwithstanding that the declaration in section 5 has been completed and signed, the Receiving Agent and the Company reserves the right to request of you the identity documents listed below and/or to seek verification of identity of each holder and payor (if necessary) from you or their bankers or from another reputable institution, agency or professional adviser in the applicable country of residence. If satisfactory evidence of identity has not been obtained within a reasonable time, your application may be rejected or revoked.

Where certified copies of documents are requested below, such copy documents should be certified by a senior signatory of a firm which is either a government approved bank, stockbroker, investment firm, financial services firm or an established law firm or accountancy firm which is itself subject to regulation in the conduct of its business in its own country of operation, and the name of the firm should be clearly identified on each document certified.

A. For each holder being an individual enclose:

• (1) a certified clear photocopy of one of the following identification documents which bear both a photograph and the signature of the person: current passport, Government or Armed Forces identity card, driving licence; and
• (2) certified copies of at least two of the following documents which purport to confirm that the address given in section 2 is that person's residential address: a recent gas, electricity, water or telephone (not mobile) bill, a recent bank statement, a council rates bill, or similar document issued by a recognised authority; and
• (3) if none of the above documents show the date and place of birth of the Applicant enclose a note of such information; and
• (4) details of the name and address of their personal bankers from which the Receiving Agent may request a reference, if necessary.

B. For each holder being a company (a "Holder Company") enclose:

• (1) a certified copy of the certificate of incorporation of the holder company; and
• (2) the name and address of the holder company's principal bankers from which the Receiving Agent may request a reference, if necessary; and
• (3) a statement as to the nature of the holder company's business, signed by a director; and
• (4) a list of the names and residential addresses of each director of the holder company; and
• (5) for each director provide documents and information similar to that mentioned in A above; and
• (6) a copy of the authorised signatory list for the holder company; and

(7) a list of the names and residential/registered address of each ultimate beneficial owner interested in more than 5 per cent, of the issued share capital of the holder company and, where a person is named, also complete C below and, if another company is named (hereinafter a "beneficiary company"), also complete D below.

If the beneficial owner(s) named do not directly own the holder company but do so indirectly via nominee(s) or intermediary entities, provide details of the relationship between the beneficial owner(s) and the holder company.

• C. For each person named in B(7) as a beneficial owner of a holder company enclose for each such person documents and information similar to that mentioned in A(1) to (4)
• D. For each beneficiary company named in B(7) as a beneficial owner of a holder company enclose:
• (1) a certified copy of the certificate of incorporation of that beneficiary company; and
• (2) a statement as to the nature of that beneficiary company's business signed by a director; and
• (3) the name and address of that beneficiary company's principal bankers from which the Receiving Agent may request a reference, if necessary; and
• (4) enclose a list of the names and residential/registered address of each beneficial owner owning more than 5 per cent., of the issued share capital of that beneficiary company.
• E.If the payor is not the Applicant and is not a bank providing its own cheque or banker's payment on the reverse of which is shown details of the account being debited with such payment (see note 4 on how to complete this form) enclose:
• (1) if the payor is a person, for that person the documents mentioned in A(1) to (4); or
• (2) if the payor is a company, for that company the documents mentioned in B(1) to (7); and

an explanation of the relationship between the payor and the holder(s). The Receiving Agent reserves the right to ask for additional documents and information.

6. Contact details

To ensure the efficient and timely processing of your Subscription Form, please provide contact details of a person that Receiving Agent may contact with all enquiries concerning your application. Ordinarily this contact person should be the person signing in section 3 on behalf of the first named holder. If no details are entered here and the Receiving Agent requires further information, any delay in obtaining that additional information may result in your application being rejected or revoked.

SUBSCRIPTION FORM

Instructions for Delivery of Completed Subscription Forms

Completed Subscription Forms should be returned, by post or by hand (during normal business hours only), to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to be received no later than 11.00 a.m. on 10 February 2014, together in each case with payment in full in respect of the application. If you post your Subscription Form, you are recommended to use first class post and to allow at least two days for delivery. Subscription Forms received after this date may be returned.

For Office Use Only Log No.

Important: Before completing this form, you should read the accompanying notes. if you are a Qualifying Shareholder you should first read terms and conditions of the Open Offer in the Prospectus.

To: Capita Asset Services, acting as receiving agent for IP Group PLC

1. Application

I/We the person(s) detailed in section 2A below offer to subscribe the amount shown in Box 1 for New Shares subject to the Terms and Conditions set out in the Prospectus dated 27 February 2014 and subject to the memorandum of association and articles of the Company.

Box 1 Subscription monies

(minimum subscription of £1,000 and then in multiples of £500.)

2A. Details of holder(s) in whose name(s) shares will be issued (block capitals)

Mr, Mrs., Miss or Title
Forenames (in full)
Surname/Company Name:
Address (in Full)
Designation (if any)
Mr, Mrs., Miss or Title
Forenames (in full)
Surname/Company
Mr, Mrs. Miss or Title
Forenames (in full)
Surname/Company Name
Mr, Mrs., Miss or Title
Forenames (in full)
Surname/Company Name

2B. CREST details

(Only complete this section if New Shares allotted are to be deposited in a CREST Account which must be in the same name as the holder(s) given in section 2A).

CREST participant ID
CREST member account ID

3. Signature(s) all holders must sign

First holder signature:	Second holder signature:
Name (Print)	Name (Print)
Dated:	Dated:
Third holder signature:	Fourth holder signature:
Name (Print)	Name (Print)
Dated:	Dated:

4. Cheques/banker's draft details

Pin or staple to this form your cheque or bankers draft for the exact amount shown in Box 1 made payable to "Capita Registrars Limited re: IP Group PLC – Offer for Subscription A/C". Cheques and bankers payments must be drawn in sterling on an account at a bank branch in the UK or the Channel Islands and must bear a UK bank sort code number in the top right hand corner and should be crossed "A/C payee only".

5. Reliable introducer declaration

Completion and signing of this declaration by a suitable person or institution may avoid presentation being requested of the identity documents detailed in section 5 of the notes on how to complete this Subscription Form.

The declaration below may only be signed by a person or institution (such as a government approved bank, stockbroker or investment firm, financial services firm or an established law firm or accountancy firm) (the "firm") which is itself subject in its own country to operation of "customer due diligence" and anti-money laundering regulations no less stringent than those which prevail in the United Kingdom. Acceptable countries include Austria, Belgium, Canada, Denmark, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Iceland, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, the UK and the United States of America.

Declaration: To the Company and the Receiving Agent

With reference to the holder(s) detailed in section 2A, all persons signing at section 3 and the payor identified in section 6 if not also the Applicant (collectively the "subjects") WE HEREBY DECLARE:

• 1. we operate in one of the above mentioned countries and our firm is subject to money laundering regulations under the laws of that country which, to the best of our knowledge, are no less stringent than those which prevail in the United Kingdom;
• 1. we are regulated in the conduct of our business and in the prevention of money laundering by the regulatory authority identified below;
• 1. each of the subjects is known to us in a business capacity and we hold valid identity documentation on each of them and we undertake to immediately provide to you copies thereof on demand;
• 1. we confirm the accuracy of the names and residential/business address(es) of the holder(s) given at section 2A and if a CREST Account is cited at section 2B that the owner thereof is named in section 2A;
• 1. having regard to all local money laundering regulations we are, after enquiry, satisfied as to the source and legitimacy of the monies being used to subscribe for the New Shares mentioned; and
• 1. where the payor and holder(s) are different persons we are satisfied as to the relationship between them and reason for the payor being different to the holder(s).

The above information is given in strict confidence for your own use only and without any guarantee, responsibility or liability on the part of this firm or its officials.

Signed ................................................................................................................................................................. having authority to bind the firm. Name of regulatory authority ............................................................................................................................. Firm's Licence number:...................................................................................................................................... Website address or telephone number of regulatory

authority: STAMP of firm giving full name and business address ....................................................................

6. Contact details

To ensure the efficient and timely processing of this application please enter below the contact details of a person the Receiving Agent may contact with all enquiries concerning this application. Ordinarily this contact person should be the (or one of the) person(s) signing in section 3. If no details are entered here and the Receiving Agent requires further information, any delay in obtaining that additional information may result in your application being rejected or revoked.